McAfee, a complete network security company announced an agreement to acquire its rival, Secure Computing for $5.75 per common share in cash, without interest, for a total value of $413 million, a deal that is expected to be completed by year end.

In addition, Secure Computing's outstanding shares of preferred stock will also be redeemed for cash as part of the proposed transaction, at approximately additional $84 million. Totally, net of cash held by Secure, the proposed transaction would be valued at approximately $465 million.

This is the second acquisition for McAfee in less than two months, having acquired privately held data loss prevention company Reconnex for $46 million in August, and its biggest till date.

The deal will strengthen McAfee leadership position in security risk management by combining Secure Computing's strengths in firewall, Web and e-mail gateway filtering with McAfee's intrusion prevention, desktop encryption, data-leak prevention, antimalware, regulatory compliance and centralised management.

"Today's announcement of this pending acquisition is a natural extension of McAfee's security-only focus," DeWalt explained. "We expect the pending combination of McAfee and Secure Computing will create an annual projected combined revenue of just under $500 million in the network security segment of our SRM portfolio. We believe that this pending acquisition will allow us to immediately establish a leading and highly competitive position in the network security space."

With Secure Computing, McAfee expects to become one of the largest network security players, delivering the industry's most complete network security solution to businesses of all sizes, extending the success of its total protection strategy through best of breed technology suites. Also Secure Computing TrustedSource technology will extend McAfee's "in-the-cloud" security as a service offering

With Secure Computing, McAfee expects to be able to deliver the complete content and data lifecycle management at the network, spanning detection, filtering, encryption, blocking, archiving, reporting and compliance

Dan Ryan, president and chief executive officer, Secure Computing said, "I believe the combination of the two companies will allow us to reap the benefits of a worldwide dedicated sales team three times our size, best-in-class security research, greater partner distribution and enhanced cross-selling opportunities, combined, we believe we will become a leader in the network security space."

Secure Computing has more than 22,000 customers in 106 countries that will depend on McAfee as a single source for complete security portfolio-spanning endpoint, network, data and risk and compliance. Earlier the two companies have competed in many of the same security markets.

Secure Computing had become a major player in email security when it acquired CipherTrust in 2006. Secure Computing products will be incorporated into McAfee's network security business, a press release said.

McAfee has been actively expanding its reach through acquisitions, acquiring DLP vendor Reconnex in August a privately held company in Mountain View, California, that specializes in data loss-prevention technology to enterprises, government agencies and educational institutions. It had also acquired encryption vendor Safeboot last fall.

The proposed acquisition is subject to regulatory approvals and Secure Computing stockholder approval, and is expected to close in the latter part of the fourth quarter of 2008.

McAfee anticipates that following the closing, Secure Computing's technologies will be incorporated under McAfee's Network Security product business unit, headed by Dan Ryan.