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Symantec to acquire anti-spam company

Symantec said Wednesday it will buy the remaining portion of anti-spam firm Brightmail that it does not own for about $300 million.
/ Source: Reuters

Symantec Corp. said on Wednesday it will buy the remainder of Brightmail, a maker of anti-spam technology, that it does not own for about $300 million to bolster its presence in the market for filtering junk e-mail out of in-boxes.

The deal, if approved, would end Brightmail's plans to go public. Brightmail, based in San Francisco, filed in late March to raise about $80 million in an initial public offering.

Symantec, known for its Norton anti-virus computer software, said it would pay about $300 million in cash for the 89 percent of Brightmail that it does not own.

Symantec said it was too early to estimate the deal's impact on its earnings, but analysts said any impact would be minimal.

"Brightmail's growth appears to be solid though we don't see it moving the Symantec growth needle in a big way," Legg Mason analyst Todd Weller wrote in a report, adding that the acquisition was a strategically positive move.

Cupertino, California-based Symantec, which already owned an 11 percent stake in Brightmail via a July 2000 investment, hopes to close the transaction by early July.

"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," said John Thompson, Symantec's chairman and chief executive in a statement. "Brightmail is the leader in helping enterprises, service providers and wireless carriers mitigate this threat."

Symantec and its closest rival Network Associates Inc. have been acquiring smaller computer security companies as they seek to offer a wider package of network and computer security to large businesses.

Spam has become a growing concern for companies and individuals, resulting in clogged network traffic and wasted productivity in the time people spend to eliminate unwanted ads touting everything from miracle herbs to get-rich-quick schemes.

Brightmail specializes in producing anti-spam software for businesses and Internet service providers, and generated a profit of $1.2 million during its last fiscal year on sales of $26.1 million. The company estimates that 63 percent of all Internet e-mail traffic is now spam.

The deal comes as Symantec continues to see strong demand for its own anti-spam software. The company reported a 43 percent increase in revenue during its fiscal fourth quarter, boosted by sales of its security software in response to increasing threats from computer viruses.