Symantec Bids on MessageLabs' SaaS Business

Symantec Corp. (Nasdaq: SYMC) on Wednesday said it has agreed to buy MessageLabs Ltd. for $695 million in cash, and plans to fold the company's online e-mail and instant-messaging service for business into Symantec's online backup, storage, and other software-as-a-service offerings.

The deal, which is subject to regulatory approval, is expected to close by the end of the year. After that, Symantec plans to integrate MessageLabs' services with its own to form a new SaaS product group for businesses. Initially, such a combination would bring together MessageLabs' online e-mail and e-mail storage, IM, and Web filtering services with Symantec's online backup, storage, and remote access products. The latter makes it possible for corporate employees to access information and applications on their office PCs from any location where there's Internet access.

Symantec expects the combined technologies to give it "a great foundation on which to grow" its SaaS product line, John W. Thompson, chairman and chief executive of the company, said in a statement.

MessageLabs -- which has regional headquarters in Gloucester, United Kingdom; New York; and Sydney, Australia -- generated $145 million in revenue during the fiscal year 2008 ending July 31. The company grew by 20% over the previous fiscal year. The negotiated price is "a fair valuation, in our opinion, given the company's [MessageLabs'] growth opportunities and business model," analyst firm FBR Research said in a financial note. The firm went on to say that the company's products are in a "fertile segment of the enterprise security food chain that we believe is poised to see strong growth over the coming years."

MessageLabs has 512 employees and more than 19,000 clients ranging from small businesses to Fortune 500 companies. Symantec said the acquisition would make it possible to cross-sell the companies' customer bases.To give this story some perspective, InformationWeek has profiled how on-demand software changed the Humane Society's IT strategy for the better. Can it do the same for your organization? Download the report here