NetScreen to acquire Neoteris

The two security specialists will merge, as small and medium-sized security providers come 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 the 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.