Security company Symantec is to acquire the email-security services provider MessageLabs.
The two companies announced the deal on Wednesday. Symantec has signed an agreement to buy MessageLabs for $695m (£400m) in cash, payable in approximately £310m sterling and $154m US dollars. The agreement is subject to regulatory approval, but Symantec said it expects the deal to close by the end of the year.
Jeff Hausman, vice president and general manager of the Symantec Protection Network, told ZDNet.co.uk that Symantec was acquiring MessageLabs to gain "leading capabilities" in software-as-a-service (SaaS) provision.
"We saw tremendous opportunities and a great enterprise fit in bringing MessageLabs into the fold," said Hausman. "It will allow us to create a robust platform and a base to expand on for software-as-a-service, and gives us leading capabilities in hosted and online service models."
Hausman said that MessageLabs's hosted email service, combined with Symantec's Brightmail capabilities, would give customers the choice of using online services, offline products, or a combination of the two.
"As we work through to the close of the transaction, we can sit down with customers and work out what the right form factor is for them," said Hausman. "MessageLabs already uses Brightmail in its online services, and [the deal] gives customers the opportunity to use new form factors."
Symantec plans to cross-sell and up-sell its backup and storage products to MessageLabs existing 19,000-organisation customer base. "We're looking to provide a portfolio of services and an online one-stop shop, and to provide a single point of contact," said Hausman.
MessageLabs and Symantec will combine services under an entirely new product name, but Hausman declined to comment on what that would be. "We're still working on it," he said.
Adrian Chamberlain, chief executive officer of UK-based MessageLabs, welcomed the proposed deal. "From our point of view, it's a marriage made in heaven," he said. "We're robust financially and growing, but [the deal] will enable us to secure additional geographical and channel reach."
Chamberlain called the $695m price tag "fair", but added that the price was in part dictated by the current instability in the financial markets.
"There was a lot of hard bargaining, but our shareholders feel it's a fair price," said Chamberlain. "Clearly there are very few acquisitions being done at the moment, particularly in cash, and both sides are aware of asset deflation. [But] MessageLabs is a special company, [and] we think the future is better with Symantec."
Hausman said Symantec felt satisfied with the price tag. "Symantec feels we have struck a fair price, and we are confident we can expand and grow the business," he said.
However, both Chamberlain and Hausman said there would be job losses as a result of the acquisition. "The intention is to retain the vast bulk of our  employees, but we would be completely naïve if we said there would not be some harmonising," said Chamberlain, who added that he would be employed as a senior Symantec vice president, reporting to chief operations officer Enrique Salem.
The "vast majority of employees will be retained", Hausman said. "As with any transaction we will look for opportunities to understand and identify synergies," said Hausman. "We'll be looking at teams on a case-by-case basis, and there may be some impact."
The proposed deal comes after Symantec chief executive John Thompson said on Tuesday that the bulk of Symantec's security, backup and archiving products and services would be "in the cloud" by March 2009.
The move mirrors other security vendors extending SaaS capabilities. In January, Kaspersky launched its own hosted email service, while McAfee announced plans to acquire Secure Computing, with its online reputation portfolio, in September.
Security analyst Andy Buss of Canalysis told ZDNet.co.uk that he was "not surprised" by the acquisition plans. "This would fill a gap we knew Symantec had with online threats, and also this bolsters Symantec's Brightmail [email security] appliance," said Buss. "Now Symantec can be in the cloud as well as on the premises."
Buss said the deal would benefit enterprise customers. "It's great for enterprises as they can have more trust in a one-stop shop," said Buss. "MessageLabs would be part of a stable, so [enterprises] wouldn't have to worry about the company being bought."