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NetScreen to acquire Neoteris

The two security specialists will merge, with small and medium-sized security providers under increasing pressure to consolidate

Network security company NetScreen is to acquire Neoteris, a security software specialist, in a deal likely to spark off a wave of consolidation in the security industry.

NetScreen, known for its network firewall products, has signed an agreement with Neoteris that could be worth almost $300m in a combination of shares, cash and revenue bonuses.

Graham Titterington, principal analyst at Ovum thinks the companies are a natural match and expects others in the segment to follow their lead. "One is the gatekeeper to the corporate network; the other has access control and decides who they let through. The companies fit together quite nicely," he said.

"We are in a situation where the industry is on the verge of quite a bit of consolidation. Small and medium players -- and I put NetScreen in this category as of today -- are going to have to merge and grow," said Titterington.

According to Titterington, there are hundreds of vendors in the enterprise-security market and although enterprises wouldn't want to deal with a "one-stop shop", the current market is too fragmented. "Even if you just restricted it to pure product vendors, they are still in three figures," he said.