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Symantec to Buy Anti-Spam Company - InternetNews.
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Symantec to Buy Anti-Spam Company

Internet security specialist Symantec inked a deal to purchase Brightmail for $370 million, the company said Wednesday.

The deal comes less than two months after San Francisco-based Brightmail filed IPO paperwork. At the time, it said going public would garner them an additional $80 million.

Symantec said the acquisition was fueled in part because "spam has increasingly become one of the most severe threats to individuals and enterprises today, topping viruses as the number one problem plaguing e-mail systems and administrators."

Directors for both companies approved the cash transaction. The acquisition will now be scrutinized by government regulators, but is expected to be final in early July. Steve Cullen, Symantec senior vice president of security products, told internetnews.com the integration process is expected to begin shortly after that, although there is some familiarity between the two companies.

Cupertino, Calif.-based Symantec already has an 11 percent stake in the company after it made its first strategic investment in Brightmail in 2000.

"We already know each other's technology because we have a relationship with Brightmail, but it's been mostly at arm's length," Cullen said. "Now we can look to see if there is some innovation that we're missing and plan to do something that we've never seen before."

The technology gained in the acquisition is expected to enhance a broad range Symantec's enterprise lineup, but the deal should have the most impact on Symantec's Mail Security for SMTP Gateways product. The software was recently updated with a new Mass-Mailer Cleanup feature that eliminates worm-infected messages.

Cullen said Symantec will take a look at Brightmail's offerings (Brightmail Anti-Virus, Brightmail Reputation Service, Brightmail Anti-Fraud), which help keep out spam and reduce the number of legitimate e-mails blocked, or false positives, to less than one message in a million.

The deal is also a boon to Symantec as Brightmail supports has major contracts with nine out of the top 12 ISPs including MSN's Hotmail and AT&T Worldnet, Cox Communications, EarthLink, TelstraClear, Xtra and Verizon Online. It does not work with AOL, something Cullen said Symantec may address considering as it has the option to include Brightmail's technology in its consumer-focused Norton product line.

Brightmail also has contracts with 1,800 other enterprises including some of Symantec's competitors such as Network Associates . Cullen said decisions on Brightmail's partnerships and how to honor and support their contracts would be addressed only after the acquisition is finalized.

In a research note to investors this morning, analysts at SG Cowen said the Brightmail deal was "pricey" but that the deal made strategic sense for Symantec.

As the global level of Internet security risks continue to rise, so to do the fortunes of Symantec. The company reported a positive fourth-quarter and year-end result on April 28th. The results revealed a 43 percent increase in revenue in the quarter over the previous year. Overall Symantec's revenue's were up by 33 percent from 2003.