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BT Buys Security Specialist Counterpane

Counterpane co-founded by cryptologist Bruce Schneier

(San Jose, Calif.) BT Group PLC, the former British telecom monopoly, said it bought Silicon Valley-based Counterpane Internet Security Inc. to boost its computer security services for corporate customers.

Financial terms were not disclosed.

The acquisition is the latest example of industry giants looking to beef up their security offerings.

Data storage provider EMC Corp. completed two deals with information security companies this year, buying RSA Security and Network Intelligence for a total of $2.3 billion. International Business Machines Corp. is set to soon close a $1.3 billion acquisition of network monitoring company Internet Security Systems Inc.

Counterpane monitors 550 computer networks worldwide for multinational and Fortune 100 customers to help them guard against hackers and other security threats. The privately held company, launched in 1999, had assets of $6.8 million at the beginning of last year, BT said in a statement.

One of Counterpane's founders was Bruce Schneier, a leading cryptologist who in recent years has become a wide-ranging security guru and critic of national security practices.

Under the buyout, Schneier will continue in his role as Counterpane's chief technology officer and Paul Stich will remain chief executive.

"They didn't hire me to be a yes man," Schneier said Wednesday in a phone interview from France, where he was a speaker at a security conference. "I'm going to be an independent security thinker, and they know that."

Talk of a possible acquisition began about a year ago.

A deal with a global services company made sense for the startup, Schneier said. "A large public company gives us instant credibility, and they've got access to customers, giving us enormous opportunities to sell Counterpane."

BT said Counterpane will help expand its security management services, particularly in the U.S.

"Security threats get more sophisticated and a larger number of companies are outsourcing the management of their security infrastructure to specialized security service providers. Counterpane is a leader in this space," said Andy Green, chief executive of BT Global Services.

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