Under the agreement, unanimously approved by both boards of directors, Veritas shareholders would get 1.242 Symantec shares for each of their Veritas shares.

Symantec shareholders would end up with about 60 percent of the combined company and Veritas the remaining 40 percent.

The company would still operate under the Symantec name.

Symantec chairman and chief executive John Thompson would keep his job in the newly enlarged company.

"Customers are looking to reduce the complexity and cost of managing their IT infrastructure and drive efficiency with fewer suppliers," Thompson said in a company statement.

"The new Symantec will help customers balance the need to both secure their information and make it available, thus ensuring its integrity. We believe that information integrity provides the most cost-effective, responsive way to keep businesses up, running and growing in the face of system failures, Internet threats or natural disasters."

Veritas chairman and chief executive Gary Bloom, who will be president of the combined firm, said the "total market opportunity" for the group was 35 billion dollars, expected to grow to 56 billion dollars by 2007.

Symantec said the deal would enable it to expand the combined revenue base, financial scale and resources.

The aggregate revenue of the combined company was expected to be approximately five billion dollars for fiscal year 2006, which ends in March

About 75 percent of the revenue would come from business and 25 percent from retail consumers.

The combined company also would have approximately five billion dollars in cash.

The deal was expected to close in the second calendar quarter of 2005, subject to approval by the shareholders of both companies and by market regulators.

Excluding the cost of the merger and other write-downs, the merger would raise operating earnings in the first year of operations from the current mean market forecast of 98 cents per share, as measured by Thomson Financial First Call, the two firms said.

Shareholders disliked the agreement.

Symantec plunged 2.25 dollars, or 8.22 percent, to 25.13 dollars as investors fretted over the deal.

Veritas eased 12 cents, or 0.43 percent, to 27.99 dollars.

Michael Turtis of Prudential Equity Group downgraded his rating on Symantec to "neutral" from "overweight" even before the two companies confirmed the widely expected deal.

Turtis said in a report that the deal "plus increasing competition in the consumer security market could increase operational and strategic risks and dent growth in 2005."

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