Network Security, Security Strategy, Plan, Budget

Symantec to acquire MessageLabs for $695 million


Symantec on Wednesday announced the acquisition of MessageLabs, a UK-based online messaging and web security services provider, for $695 million.

The acquisition is designed to help Symantec in growing its software-as-a-service (SaaS) market share and strengthen its position in the messaging security market, the company said.

In a statement, Symantec said the purchase will enable it to offer more SaaS offerings and tap into MessageLabs' large European customer base.

“The combination will create what we believe will be the most comprehensive SaaS offerings with a simplified user experience that packages billing, support and application management through one easy-to-use portal,” John Thompson, chairman and CEO of Symantec, said in a statement.

Scott Crawford, research director at Enterprise Management Associates, told on Wednesday that the merger is "very significant" because of the statement it makes about the direction that security is going and the increasing emergence of SaaS.

The acquisition also reinforces prior acquisitions Symantec has made around messaging security in instant messaging, Crawford said.

Adrian Chamberlain, CEO of MessageLabs, contended in the statement that the SaaS market is growing and is a “must have” security purchase. MessageLabs has grown 20 percent during the 2008 fiscal year, which ended July 31.

Symantec said MessageLabs generated $145 million in revenue during the 2008 fiscal year. Its client base consists of 19,000 small businesses and Fortune 500 companies, totaling more than eight million end-users.

The acquisition is expected to close by the end of the 2008. Combined, Symantec and MessageLabs will have more than twice the market share of their nearest competitor, according to Symantec.

Although the integration and branding issues have not fully been sorted out yet, MessageLabs' Chamberlain will be leading the SaaS product business unit within Symantec, Greg Hughes, chief strategy officer at Symantec told Wednesday.

Chamberlain told Wednesday that because of Symantec's resources and its global reach, MessageLabs will be able to develop at a faster rate than it would have otherwise.

"Symantec's acquisition of MessageLabs is yet another validation of how reducing the risks associated with email continues to be one of the top enterprise security concerns," Gary Steele, CEO of Proofpoint, a rival SaaS provider, told on Wednesday. "In today's economic environment, companies are looking to SaaS and hybrid deployment models [that combine SaaS solutions with on-premises appliances or software] as a cost-effective way to meet their security needs.

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