Shares in Zergo, the publicly quoted British Internet security specialist which recently acquired Baltimore Technologies, jumped more than 23 per cent yesterday, as investors hungry for technology hot-stocks digested news of an alliance and a licensing deal. The group is shortly to change its name to Baltimore.
Zergo - which specialises in encryption and digital signatures to secure electronic commerce - announced deals with PricewaterhouseCoopers, the accountancy group, and Intel, the US semiconductor giant.
Zergo's shares closed up 1621/2p sterling at 7021/2p (#10.02), providing strong gains for Irish investors in the enlarged group, including Mr Dermot Desmond and Baltimore management led by Mr Fran Rooney. Mr Desmond's stake is now worth £21 million.
The likelihood of a significant US alliance deal for the group was flagged at the time of the Zergo deal with Baltimore .
Analysts said the deals helped solidify Zergo's position as number two in the global encryption market after US group Entrust.
The specialist market in which Zergo and Baltimore operate - known as public key infrastructure - is expected to prosper, as it is seen as an essential building block for the refinement of the electronic commerce market.
The products, which act like electronic identity cards, are expected to build public confidence in using e-commerce and corporate readiness to rely more heavily on the Internet for the exchange of documents.
The public key infrastructure market is expected to grow from $143 million (#123 million) last year to at least $1.5 billion a year by 2002, with some estimates putting the figure as high as $2 billion.
The group said consolidation in the global encryption market was likely to continue and it was always seeking acquisition opportunities.
Analysts said the main challenge for Zergo was growth in the US - which represents 50 per cent of the world market. The enlarged group is already market leader in Europe.
They said British investors were short of shares in the kind of technology companies that have proved so popular on the US stock market. Continued good news from Zergo, which was not rated as highly as its US counterparts, was likely to continue to drive the shares higher.
