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Sophos snaps up spam fighter ActiveState

The $23 million deal gives the software company stronger footing in the increasingly crucial antivirus and antispam markets.

Antivirus software company Sophos said Wednesday that it acquired ActiveState, a provider of corporate spam-fighting technology, for $23 million in cash.

The deal gives Lynnfield, Mass.-based Sophos strong footing in two increasingly crucial and merging businesses: antivirus and antispam tools. ActiveState's line of corporate spam software and professional tools for open-source programmers will complement Sophos' antivirus technology and give it an entry into new distribution markets, Sophos said.

The deal also highlights the potential for consolidation in a market that's still largely fragmented. Corporations typically contract with several separate technology companies to protect their e-mail networks from viruses and spam using security software and content-specific filtering. But e-mail software providers are setting their sights on building full-service shops. Already, companies including NetIQ, NAI and Elron Software have merged with, or have bought, complementary e-mail services.

"This market is going to consolidate into larger vendors that offer suites of e-mail hygiene products," said Matt Cain, vice president of research firm Meta Group.

Cain said that Sophos is well-positioned within the market, partly because there's no overlap between the technologies and because the buyout gives it new distribution channels.

Under the deal, Sophos acquires ActiveState's more than 100 employees and over 2 million customers, including Hewlett-Packard, Intel and Microsoft. Sophos said it plans to maintain ActiveState's product lines for open-source programmers and its brand name. It will also keep ActiveState's headquarters in Vancouver, British Columbia, as a center for research and development, as well as a support hub in Canada.

ActiveState's president, Steve Munford, will become Sophos' global vice president of messaging.

Spam has grown to unmanageable proportions--it's estimated to make up nearly 50 percent of incoming e-mail to the workplace--and has become a primary source of virus infections on corporate networks. Junk e-mailers can use computer viruses to propagate promotions or amass e-mail databases. The Sobig generation of computer viruses represented such a convergence of virus and spam techniques. Corporations have a greater stake in bolstering their systems in both arenas.

"The proliferation of spam, combined with our existing customers' increasing desire to receive antivirus and antispam protection from the same source, means that now is a very strategic time for us to expand into spam filtering," Peter Lammer, founder and joint CEO of Sophos, said in a statement.

"ActiveState's proven technology, its impressive customer base, its expertise in the open-source world, and in particular the quality of its staff are very valuable additions to Sophos," Lammer said.