As part of the deal, Counterpane's founder, CTO and highly regarded security guru,, will join the BT payroll. within Counterpane, based in Mountain View, Calif.
Andy Green, CEO of BT Global Services, said the acquisition is a reaction to BT customers' demand for more security at the network level to protect "increasingly business-critical applications."
The deal has been a long time in the pipeline, according to Schneier. Posting on his blog, he said, "This is something I've been working on for about a year, and I'm thrilled that it has finally come to pass."
Around the time acquisition discussions began, Counterpane had audited assets of $6.8 million. BT declined to disclose the value of the deal, but a spokesman said it was worth "tens of millions of dollars."
Will Sturgeon of Silicon.com reported from London.