Symantec said Wednesdady that it has signed a definitive agreement to acquire Web security vendor MessageLabs for approximately $695 million in cash. The deal, subject to foreign currency adjustments, is scheduled to close by the end of 2008.
With MessageLabs' online messaging and Web security services, Symantec execs say that the company will gain significant marketshare in both Software-as-a-Service and messaging security segments -- two areas that have experienced rapid growth within the last year, execs say.
"This acquisition gains us leadership in a very attractive segment of the market; Security-as-a-Service," said Greg Hughes, chief strategy officer for Symantec. "There are a number of exciting benefits."
In addition, Hughes said that pending merger will give Symantec at twice the market share of the nearest competitor in online messaging security. "We'll have the broadest range of offerings," he added.
Execs said that integration strategy for blending the two companies is still being discussed. Whether the company will experience layoffs is also yet to be determined, but executives said the "vast majority" of MessageLabs employees would be retained.
MessageLabs is best known for its array of managed service offerings to protect, control encrypt and manage communications on Web-related platforms. The company generated approximately $145 million in revenue during the 2008 fiscal year, growing more than 20 percent over the previous fiscal year. Altogether, the company supports eight million end users and more than 19,000 clients, spanning the market segments from SMB to Fortune 500 enterprise.
"Symantec has huge resources to develop solutions at a much faster rate than what we could do on our own," said MessageLabs CEO Adrian Chamberlain. "The complementarity of the acquisition is good news for both companies."
In addition, the move broadens Symantec's security capabilities in the messaging security market, incorporating software, appliance and hosted services, which allow Symantec to enter new market segments and verticals.
Executives say that MessageLabs' existing technologies will also be used to strengthen the Cupertino-based company's existing portfolio, which includes backup, storage and online remote access. The combined company will be able to incorporate SaaS offerings in data loss prevention, compliance, endpoint security and archiving, boosted by MessageLabs' expertise in SaaS sales, operations and support.
For channel partners, executives say that the merger will provide a broader network of partners in more locations throughout the world, and expand Symantec's entire channel program across the globe. Executives maintain that the acquisition would broaden service offerings for both Symantec and MessageLabs partners.
How the acquisition will affect the channel models of both companies remains to be seen. About 50 percent of MessageLabs business is currently conducted through the channel. Chamberlain said that the company still planned to retain it's polar model, but said there could potentially be opportunities to move "toward the channel and away from direct."
"It makes so much sense from our customer's standpoint to have this choice of different form factors. It really makes sense for Symantec overall to continue to invest in SaaS," said Hughes. "I think it's very exciting for our customers, and very exciting for our channel partners to have that choice and flexibility."
"We just have to be thoughtful about how we integrate the two companies," he added.
