Symantec buys MessageLabs for £390 million

Symantec will pay $695 million (£390 million) for MessageLabs, a security vendor that offers a hosted spam and web traffic filtering service.

MessageLabs offers its services as a monthly subscription. The filtering is performed within the company's 14 data centres located around the world, a type of computing known as "software as a service" or cloud computing. It also can route a company's web traffic through its filters to block potentially harmful websites as well as scan instant messages.

Software-as-a-service offerings have been increasingly popular with businesses since it frees administrators from installing software upgrades and performing other maintenance tasks they would have to do in-house. MessageLabs' subscribers turn over the management of their email and web traffic security to the company and do not have to install on-site equipment.

For Symantec, the acquisition of MessageLabs gives it an alternative email security offering to BrightMail, the company's anti-spam and anti-virus appliance.

"We think the opportunity to expand our footprint in the rapidly growing software-as-a-service market is significantly enhanced by this team becoming part of Symantec," Symantec CEO John Thompson said in a conference call to discuss the deal.

MessageLabs holds a 29.7 percent share of the hosted security services market, followed by Google, which owns Postini, at 18.7 percent and Microsoft at 8.7 percent, according to Symantec. Before this acquisition, Symantec held just 1.1 percent.

MessageLabs' service will be integrated into the Symantec Protection Network, an online-based backup, data restoration and remote access service launched in April 2007 for small to medium-size businesses. Symantec will put its Protection Network services within MessageLabs' data centers.

Symantec also said it is going to create a specific software-as-a-service focused product group. Adrian Chamberlain, CEO of MessageLabs, will lead the team and report to Enrique Salem, Symantec's chief operating officer.

MessageLabs, which is based in Gloucester, England, has about 19,000 clients worldwide. The company reported $145 million in revenue for its fiscal 2008 that ended July 31. The revenue figure is 20 percent more than in fiscal 2007.

Symantec officials said during the conference call with analysts that two-thirds of MessageLabs' customers are in Europe, and Symantec sees opportunities for pushing the company's service in the Americas. Symantec is based in Cupertino, California.

The deal, expected to close by the end of December, is subject to approval by regulators.