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The deal, which must still be approved by Pentasafe's shareholders, is the latest example of consolidation in the security software industry, and is expected to boost NetIQ's stake in the security management market.
Under the terms of the agreement, NetIQ will pay $192.5m (£123m) in cash and issue approximately 4.3 million shares and options to Pentasafe shareholders.
With the acquisition of Pentasafe's line of integrated security management solutions, including its VigilEnt software, NetIQ appears to be shoring up its position against larger competitors such as Computer Associates, IBM Tivoli and Symantec.
In addition to acquiring Pentasafe's approximately 1,300 customers, NetIQ will add vulnerability assessment, password management, and policy management capabilities to its line of products, according to NetIQ chairman and CEO Charles Boesenberg.
And, while NetIQ's products have long been associated with managing Microsoft networks, the addition of Pentasafe's technology may make NetIQ's products more attractive to companies with heterogenous network environments that include machines running Unix, Linux and others.