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Symantec is to buy the British messaging security firm MessageLabs for $695m in cash.

The company will merge MessageLabs with its own Symantec Protection Network for a more comprehensive software-as-a-service offering. This will incorporate Symantec technology in data loss prevention, compliance, endpoint security and archiving.

Software-as-a-service, along with its sibling cloud computing, is a hot topic, even in these straitened times. It is an efficient way especially for small and medium-sized businesses to access technology that they could not otherwise afford.

Big software companies - and Symantec is a very big software company indeed - need to navigate their way through this new world, while trying to safeguard as much of their traditional licence revenues.

Buying a company that is already working to a software-as-a-service model looks like a sensible move, as it enables Symantec to tap into new revenues, not simply cannibalise its own.

The purchase price for MessageLabs looks a bit toppy for a business that generated $145m in the year to July 31, 2008. But MessageLabs is growing at a lick - more than 20 per cent in fiscal 2008. Symantec is convinced that it can cross-sell and upsell its own services to MessageLabs's 19,000 customers, and MessageLabs services to its own much bigger customer base.

The deal is expected to close by the end of the year. In August, Symantec announced its intention to buy PC Tools, the Aussie anti-spyware vendor, and nSpace, a virtual workspace developer. In June, the company bought a consumer online backup firm called Swapdrive for a reputed $123m.

Click here for the press release. ®

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