While Symantec CEO John Thompson would not be drawn on plans for future deals, it is clear that the new company has huge ambitions and will be looking for further acquisitions once Veritas has been digested.

Mr Thompson insisted that savings were not the main motivation of the merger that will bring together two of the fastest-growing major software companies, with little product overlap. The deal is expected to be accretive to Symantec earnings in its first full financial year to March 31, 2006 when revenue is expected to grow 18% to $5 billion.

Under terms of the widely leaked deal, Symantec shareholders will end up with 60% of the combined company, with Veritas holding the remaining 40%. Veritas shareholders will receive 1.1242 shares of Symantec stock, valuing each Veritas share at $28.61.

The logic behind the merger is that the current major obsession of CIOs is both protecting and making available a fast-growing volume of data, whose security is critical now that it has to be available to satisfy regulatory requirements.

Symantec, which is best known for its Norton anti-virus software, can provide the security for networks and systems, while Veritas offers software to manage the storage and backup. However, if the aim is to offer a one-stop shop for infrastructure management, there are gaps in the product line-up with systems management the most obvious next step.

Symantec has already dipped its toe into this space with the $100 million October 2003 acquisition of On Technology. Veritas Software has also been moving into this market as part of its utility computing push. In 2003, it paid $609 million for Precise Software Solutions, which offers application management and SRM software, while the previous year it acquired start-up Jareva Technologies, which develops server-provisioning software.

A more substantial acquisition would be needed to give Symantec more muscle in this market and an obvious target is high-flying Altiris, which in its last quarter to October 31 hoisted revenue by 60.5% to $40.7 million.

A full-scale push into systems management would bring Symantec dangerously into territory dominated by Computer Associates’ Unicenter, IBM’s Tivoli, and HP’s OpenView.

Mr Thompson denied the merger was a defensive move, motivated by a slowdown in its consumer business. Approximately 75% of the revenue of the combined company will come from enterprise customers and 25% from the consumer market.

By a happy coincidence, Veritas has had its eye on the consumer market as broadband-enabled homes are increasingly keeping growing volumes of media in digital form and its first product for this space is slated for release in fall 2005.

The combined company will have operations in 40 countries and 13,000 employees. Both companies have strong financial records. In its last full year to December 31, 2003, Veritas increased net income by 377% to $274.2 million on revenue 17.6% higher at $1.77 billion. Symantec increased net income by 49.2% to $370.6 million on revenue 32.9% higher at $1.8 billion in the year to March 31, 2004.