Plausible Deniability

There’s word today that Symantec Corp. has agreed to buy UK SaaS-based antispam firm MessageLabs for the equivalent of $695m in cash. The deal will be the biggest in the SaaS space, outstripping even Google’s $625m buyout of Postini in July, 2007. We’ll have much more to say about this later in the day, but a couple things to note:

- At $695, Symantec is paying around 4.7x MessageLabs FY 2008 revenues of $145m — a good bit of change, but a much lower premium than the Google-Postini deal, which we estimated as being close to 9x revenues. That’s a reflection of the tougher market right now, but also of cooler heads prevailing when it comes to SaaS.

- We always find it interesting when companies re-buy into spaces they’ve already invested in. If you remember, Symantec already laid out some $370m back on 2004 to acquire antispam firm Brightmail. Now, of course, Brightmail had a different model, selling more traditional on-premises spam gateways, but given that Symantec had the Brightmail antispam engine and expertise in house, it makes you wonder why the company felt it needed to plunk down almost $700m just to get antispam as a service. (Note: we’re not saying this wasn’t a worthwhile investment, just that it’s…interesting.) At the end of the day, though, Symantec gets a top shelf antispam services company with a fast-growing Web threat detection service, a mature SaaS platform for its other products and a 19,000 strong customer base to upsell into.

- The truth behind this acquisition may lie in Symantec’s repeated references to MessageLabs’ “deep expertise in the SaaS market” and the synergies (to summon the ghost of the 1990s) between MessageLabs platform and Symantec’s nascent Symantec Protection Network (SPN) SaaS platform. SPN has been inching along, most recently with a beta release of an online remote backup feature in September. Given Symantec’s already deep investment in antispam and a mature product line, this deal may signal that the company realizes that SaaS is an entirely new game, that SPN isn’t the plug it in SaaS platform for Symantec’s other products that the company’s messaging has sometimes suggested, and that it needed to deepen its bench when it comes to SaaS.

More to come on this latest deal in the SaaS space…