Shareholders from both companies must approve the agreement. The companies expect the deal to close in the third quarter.
Both parties painted the acquisition as an online commerce play, with Network Solutions as the entry point for companies looking to get online and VeriSign as the provider of security for transactions and corporate networks.
"There's a tremendous amount of synergies between the two companies," Network Solutions spokesman Christopher Clough said Tuesday. "We've been partners for a long time."
Stratton Sclavos, president and CEO of Verisign, sits on the board of Network Solutions. The companies have a distribution agreement.
"Our combined company will serve as the trust utility that will power the Internet economy," Sclavos said.
Under the agreement, Network Solutions would operate as a separate unit under VeriSign. Network Solutions CEO Jim Rutt would report to Sclavos.
The deal took Wall Street by surprise. Shares of VeriSign plunged in pre-opening trades, while Network Solutions stock soared.