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Check Point Software to Buy Zone Labs

The company will pay $205 million in cash and stock for the Internet security software provider.
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Check Point Software Technologies

(CHKP) - Get Check Point Software Technologies Ltd. Report

announced late Monday that it is buying privately held

Zone Labs

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for $205 million in cash and stock.

Check Point will pay approximately $113 million in cash plus approximately $92 million in shares, and will also assume employee stock options of Zone Labs, which could convert to approximately 2.9 million Check Point shares. The merger agreement has been approved by the boards of directors of both companies

The two companies develop and sell software related to Internet security. Zone Labs is best known for its ZoneAlarm firewall, while Redwood City, Calif.-based Check Point makes a broader line of security software, including virtual private networks.

The acquisition is expected to close in the first quarter of 2004. Zone Labs will then become a unit of Check Point and its 200 employees will join the company when the acquisition closes.

Shares of Check Point slid 32 cents, or 1.8%, to $17.03 Monday.