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Veritas to buy maker of e-mail storage tools

In KVS, Veritas is getting the No. 1 maker of e-mail retrieval tools, an analyst says.

Veritas Software announced on Tuesday that it plans to acquire KVS in a move designed to expand its e-mail storage and archiving offerings.

Under the deal, Veritas will pay $225 million in cash for the privately held e-mail tools maker. Reading, England-based KVS sells software for storing and managing e-mail, functions that are gaining importance in corporate America, as regulatory changes force businesses to store many kinds of data, including e-mail, and make sure that it can be easily retrieved.

"With growing regulatory requirements, customers need solutions that allow them to quickly discover specific information, whether it's in e-mail or personal documents," Gary Bloom, Veritas' chief executive, said in a statement. "With the addition of KVS, we can deliver customers the market-leading software for storing, managing, backing up and archiving all their information."

KVS' products archive information that resides within Microsoft Exchange, Outlook, SharePoint and file systems.

The deal is expected to close by the end of September. KVS' 200 employees will operate as a separate unit called Veritas Enterprise Vault.

The KVS buy is important for Veritas; in June of last year, the company unveiled its Veritas Edition for Microsoft Exchange 2000. That technology was designed to provide customers with a one-step means of protecting e-mail from virus problems or data corruption, and for recovering e-mail. The acquisition of KVS will help Veritas expand its efforts.

"This allows them to leapfrog into e-mail retrieve by acquiring the No. 1 leader in the space," said Ken Kiarash, an analyst at Buckingham Research Associates.

Once the acquisition is complete, Veritas plans to discontinue its Veritas Data Lifecycle Manager 5.0 product, which it had begun marketing in April. "There was significant overlap between KVS and Lifecycle," said Terry Noonan, chief technology officer of Veritas' data management group.

David Rudow, an analyst at Piper Jaffray, said the decision to jettison Lifecycle in favor of KVS is a good one.

"I heard from customers that Lifecycle was an immature product," Rudow said. "Veritas didn't have time to let their product mature when e-mail archiving is so hot. They needed to grab market share."

And because Lifecycle had not yet gained traction in the marketplace, Rudow said, replacing it now with KVS is good timing.

Portions of the Lifecycle technology that do not overlap with KVS will be integrated with other parts of Veritas' business, such as its NetBackup DataCenter, Noonan said.

And over the next 90 days, Veritas will confer with the KVS team to compare notes on where the e-mail archiving market is heading and discuss new product ideas, Noonan said.

According to a study commissioned last year by Veritas, the need for e-mail storage technology is great. Dynamic Markets, which conducted the study, said 46 percent of chief information officers surveyed would have difficulty retrieving a particular e-mail if it were requested.

And while 92 percent of those surveyed said they had the ability to retrieve e-mail, only 18 percent had the ability to retrieve messages older than a year, according to the report.