Defense contractor 'Reinvents Itself' to operate under foreign ownership.

• Position: From the National Defense Blog

* At a time of heightened concern about attacks on U.S. computer networks, the federal government might be expected to frown on a foreign

takeover of one its cybersecurity contractors.

The $890 million acquisition last year of Maryland-based SafeNet by European digital security giant Gemalto was approved in January, although extraordinary actions had to be taken in order to allow the newly acquired company to remain a government contractor.

"SafeNet had to reinvent itself to continue to sell to the government," said Kirk Spring, president of SafeNet Assured Technologies in Abingdon, Maryland. The company provides data encryption hardware and software to military and intelligence agencies. A six-month review by the Committee on Foreign Investment in the United States and the Defense Security Service determined that, for the acquisition to be approved, Gemalto would have to spin off SafeNet's government contracting arm as an independent subsidiary that would operate entirely as a U.S. company and be overseen by a U.S.- approved board of directors.

The new subsidiary, called SafeNet Assured Technologies, accounts for just 1 percent of Gemalto's $3 billion operation but the parent company decided that the spinoff was a reasonable answer to U.S. regulators' concerns about protecting classified information that is considered of consequence to national security.

With already a large footprint in the U.S. information technology market, "Gemalto had been through this...