Antivirus vendor Sophos has concluded its acquisition of Utimaco Software, a seller of data encryption software.

With the acquisition, Sophos gets a sizeable foothold in the endpoint data protection market, where it will compete with McAfee and CheckPoint Software. Utimaco is dominant in Germany and Western Europe, selling mainly to the type of large-enterprise customers that Sophos covets, said Sophos CEO Steve Mumford.

The ¬217 million (US$314 million) purchase -- Sophos' largest to date -- was approved by Utimaco shareholders on Monday and finalized Tuesday, Sophos said. The deal, in which Utimaco, a public company, was acquired by privately held Sophos, was approved by German regulators earlier this month.

With security breaches continuing to make front page news, more companies are focusing on selling software that can help prevent sensitive data from escaping from corporate networks.

The deal will put pressure on antivirus rivals Symantec and Trend Micro to enter this market, making data encryption a standard part of their product offerings, analyst say.

It also transforms Sophos into a much larger competitor than it had been, now boasting annual revenue of more than ¬200 million and around 1,500 employees. "They certainly broaden the number of customers that we're doing business with, and we broaden their reach geographically," Mumford said. Unlike Sophos, Utimaco did not have a strong presence in Australia, Italy and Spain, he noted.

Sophos plans to retain Utimaco's SafeGuard brand name, but the company will also integrate the data leak software into its existing product line over the next year or two Mumford said. "Over time it will move to a single management console and a single architecture," he said.

Although the Utimaco acquisition marks the first time that Sophos has taken on debt to buy a company, Mumford said he did not see the deal as a major risk. Instead, he said, it sets the stage for a possible IPO (initial public offering). Sophos has been looking to go public for some time, but that has been delayed by poor market conditions.

Mumford said that an IPO was still at least 12 months off. However, he added, "Next year... I think we'll be in an very good shape to do one of the more significant software IPOs."