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Veritas to Buy E-Mail Company KVault
Tuesday August 31, 2:41 pm ET
NEW YORK (Reuters) - Veritas Software Corp. (NasdaqNM:VRTS - News), the largest independent U.S. storage software provider, said on Tuesday it will buy e-mail backup company KVault Software Ltd. for $225 million in cash in its third acquisition this year.
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KVault makes software that stores, manages, backs up and archives e-mail. The market for e-mail archiving is expected to grow 57 percent annually through 2007 as regulatory requirements became more stringent, according to research firm Gartner.
Veritas started building its own e-mail storage software last year but decided to buy KVault, which already has an established business with 900 customers, according to Mark Bregman, who heads product operations.
KVault's software allows users to create an index so they can locate specific e-mails quickly should there be a request from regulatory agencies.
"It certainly addresses a hot button in the industry, which is regulatory compliance," said Brent Bracelin, an analyst at Pacific Crest Securities.
Carolyn DiCenzo, a Gartner analyst, said the e-mail storage segment was poised for strong growth in the years ahead as more companies try to improve management of their internal communications.
"Corporate records are more and more electronically stored. We need to capture and store these records more efficiently than before. We're getting calls from companies all over the world about this," she said.
DiCenzo said software license revenue, a barometer of future growth, in the e-mail storage segment was forecast at $315 million annually by 2008, up from only about $75 million a year projected for 2004.
Veritas said it expects the deal to close by the end of September and add to its earnings within 12 to 18 months.
But the price tag is not cheap, noted Bracelin. "It is certainly at the higher end of software acquisitions, but not out of the round of what's reasonable."
Shares of Veritas, which have been hovering at its 52-week low after the company disappointed the market with an earnings shortfall last month, were down 84 cents, or 4.8 percent, at $16.57 Tuesday afternoon.
Veritas, based in Mountain View, California, bought software makers Ejasent and Invio earlier this year.
KVault, which has 200 employees and revenue of $23 million last year, has offices in the U.S., Britain, the Benelux countries, France, Germany and Australia. (Additional reporting by Spencer Swartz in San Francisco) |
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