Hewlett-Packard, the world's biggest personal-computer manufacturer, has agreed to buy ArcSight for about $1.5 billion in cash to gain security software.
ArcSight investors will receive $43.50 a share, Palo Alto, California-based HP said in a statement. That's 24 per cent more than the stock's September 10th closing price.
The deal follows purchases by HP in areas such as services, networking equipment and smartphones, lessening its dependence on lower-margin computers and servers.
ArcSight, a maker of software used to identify suspicious activity on a corporate network, may help HP better incorporate security features into other products.
"HP wants to expand from their traditional hardware offerings - printers and computers and servers - and they've gone into more services and software," said Dave Novosel, an analyst at corporate-bond research firm Gimme Credit in Chicago.
"This is something that's a little bit different for HP. This is not where they've had a strength in the past."
ArcSight rose $8.89, or 25 per cent, to $43.99 in Nasdaq Stock Market trading at 9.44am New York time.
Before today, the shares had jumped 39 per cent since the start of August amid speculation it may be the target of a takeover.
HP, down 26 per cent this year, fell 8 cents to $38.12 in New York Stock Exchange composite trading.
Bloomberg