Yahoo to acquire e-mail software maker Zimbra

Yahoo Inc. said Monday that it would buy e-mail software maker Zimbra Inc. for about $350 million.

Yahoo said Zimbra would help Yahoo expand its mail offerings and raise the Internet company’s presence in businesses and universities by enabling them to host e-mail by themselves or elsewhere while retaining their own domain names.

Zimbra currently offers e-mail, calendar and contact management tools through an open platform that lets users tailor the features and tie them with other Web services.

The acquisition could help Yahoo better compete with Microsoft Corp. and Google Inc. for business customers.

Zimbra has been able to grab customers from Microsoft’s Exchange e-mail platform by offering lower prices and a more flexible delivery method, and the software could enable Yahoo to challenge Google’s Apps for Your Domain package of e-mail, calendar, instant-messaging and other services offered free under a company’s own domain name.

The tools also could help Yahoo improve its own mail products for consumers, just as it had incorporated technology from its 2004 acquisition of Oddpost to create a Web-based application that more resembles stand-alone e-mail programs on a desktop.

After the Zimbra acquisition, expected to close in the fourth quarter, Zimbra would become a wholly owned subsidiary of Yahoo, the company said.

Yahoo shares rose 22 cents to $24.95.

Yahoo also said it had started testing a social-networking service called Mash in a challenge to Facebook Inc. and News Corp.’s MySpace.

Mash users can add photos and information about themselves to their pages and accept contributions from others. For now, an invitation from a friend is needed to join the service.

The Associated Press and Bloomberg News were used in compiling this report.