Computer Associates (CA) will acquire identity management software vendor Netegrity in an all-cash transaction valued at $US430 million.

Under the deal, Netegrity's operations will be integrated with CA's eTrust Identity and Access Management group. CA will pay $US10.75 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 woulf allow CA to consolidate its position in the emerging market for user authentication, access control and administration products, CEO Kenneth Cron said.

"We are excited about this acquisition and what it means for CA's growth opportunities in security management," CA's executive vice-president for eTrust solutions, Russel Artz, said.

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 would enhance CA's abilities in the identity management market and lend greater depth and breadth to the company's product suite, Artz said.

Netegrity users and analysts reacted cautiously to the news.

Director of corporate technology at Discovery Communications, Giuseppe Cimmino, said it was too soon to say how the move would 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," the 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 an analyst at Spire Security, Pete Lindstrom, 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 overlapped, Lindstrom said.

For instance, Netegrity's SiteMinder access management technology was 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 overlapped with CA's own provisioning software.

As a result, the acquisition was 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 anti-spyware vendor PestPatrol for an undisclosed sum. CA is incorporating PestPatrol's products into its eTrust Threat Management suite.