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Oct 10, 2008

Symantec to buy e-mail security vendor MessageLabs

The deal, valued at $695M, is expected to close by year's end
Symantec Corp. will pay $695 million for MessageLabs Group Ltd., a security vendor that offers a hosted spam and Web traffic filtering service.

MessageLabs offers its services as a monthly subscription. The filtering is performed within the company's 14 data centers located around the world, a type of computing known as "software as a service" or cloud computing. It also can route a company's Web traffic through its filters to block potentially harmful Web sites as well as scan instant messages.

Software-as-a-service offerings have grown increasingly popular with businesses because they free administrators from installing software upgrades and performing other maintenance tasks they would have to do in-house. MessageLabs' subscribers turn over the management of their e-mail and Web traffic security to the company and do not have to install on-site equipment.

The acquisition of MessageLabs gives Symantec an alternative e-mail security offering to BrightMail, the company's antispam and antivirus appliance. Symantec bought Brightmail in 2004.

"We think the opportunity to expand our footprint in the rapidly growing software-as-a-service market is significantly enhanced by this team becoming part of Symantec," Symantec CEO John Thompson said in a conference call to discuss the deal.

MessageLabs holds a 29.7% share of the hosted security services market, followed by Google Inc., which owns Postini Inc., at 18.7% and Microsoft Corp. at 8.7%, according to Symantec. Before this acquisition, Symantec held just 1.1%.

MessageLabs' service will be integrated into the Symantec Protection Network, an online-based backup, data-restoration and remote access service launched in April 2007 for small to midsize businesses. Symantec will put its Protection Network services within MessageLabs' data centers.

Symantec also said it is going to create a product group focused on software as a service. Adrian Chamberlain, CEO of MessageLabs, will lead the team and report to Enrique Salem, Symantec's chief operating officer.

MessageLabs, which is based in Gloucester, England, has about 19,000 clients worldwide. The company reported $145 million in revenue for fiscal year 2008, which ended July 31. The revenue figure is 20% more than in fiscal 2007.

Symantec officials said during the conference call with analysts that two-thirds of MessageLabs' customers are in Europe, and Cupertino, Calif.-based Symantec sees opportunities for pushing the company's service in the Americas.

The deal, expected to close by the end of December, is subject to approval by regulators.
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