Computer Associates International will acquire identity management software supplier Netegrity in an all-cash transaction valued at $430m (£241m).
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Under the deal, Netegrity's operations will be integrated with CA's eTrust Identity and Access Management group. CA will pay $10.75 (£6) for each Netegrity common share, and the proposed acquisition is subject to regulatory and shareholder approval. It is expected to be finalised within 90 days.
The merger will allow CA to consolidate its position in the emerging market for user authentication, access control and administration products, said chief executive officer Kenneth Cron.
"We are excited about this acquisition and what it means for CA's growth opportunities in security management," said Russel Artz, CA's executive vice-president for eTrust solutions.
Currently, CA offers three integrated products suites in the security management market targeted at identity and access management, threat and vulnerability management, and security information management technologies.
The Netegrity acquisition will enhance's CA's abilities in the identity management market and lend "greater depth and breadth" to the company's product suite, Artz said.
Giuseppe Cimmino, director of corporate technology at Discovery Communications, said it is too soon to say how the move will affect users.
"Our main concerns will be which products survive and whether there are any impacts to Netegrity's execution of the continued integration and enhancement of the eProvisioning product" acquired earlier from Business Layers, Cimmino said.
Another user at a large financial services company who requested anonymity expressed concern that CA's purchase of Netegrity could mean higher product prices. "Unfortunately, my opinion is that this is a very bad move for a pretty decent product," one user said.
"[CA] consistently overcharges for products which are mediocre, and their support rates are near the bottom," the user said. "We will expect the price for support to rise dramatically."
Because of previous problems with CA, the company might even drop Netegrity's IdentityMinder product altogether, the user said.
But Pete Lindstrom, an analyst at Spire Security, said the acquisition could result in substantial product rationalisation. Although CA executives portrayed today's move as a merger of companies with complementary technologies, a lot of the products overlap, Lindstrom said.
For example, Netegrity's SiteMinder access management technology has been a rival to CA's eTrust access management suite - raising the prospect that one of them could be dropped, Lindstrom said. Similarly, the application provisioning technology Netegrity acquired from its purchase of Business Layers last December overlaps with CA's own provisioning software.
As a result, the acquisition "is not so much a technology play as much as a market consolidating play", Lindstrom said.
CA's proposed purchase of Netegrity follows its August acquisition of antispyware supplier PestPatrol for an undisclosed sum. CA is incorporating PestPatrol's products into its eTrust Threat Management suite.
Jaikumar Vijayan writes for Computerworld