The security landscape is set for yet more consolidation as vendor Aladdin Knowledge Systems announced it is selling up to a group of investors led by SafeNet owner Vector Capital for $160m (£107m).

Israel-based Aladdin, which specialises in digital rights management (DRM) and authentication solutions, turned down a $180m bid from Vector last August, arguing that it “significantly undervalued” the business.

But the two parties have now reached a definitive merger agreement worth $11.50 a share.

The move is yet another example of consolidation in the security space as Vector competes with Aladdin through its wholly owned subsidiary SafeNet.

David Fishman, partner at Vector Capital, said: “We are very excited about adding Aladdin to our portfolio of outstanding technology companies and believe that placing Aladdin’s DRM and authentication assets under common management with those of our portfolio company, SafeNet, a global leader in information security, makes considerable strategic sense and will greatly benefit all stakeholders.”

Yanki Margalit, chief executive of Aladdin, said: “After extensive negotiations and careful and thorough analysis, conducted with our independent advisors, the board has unanimously endorsed this transaction as in the best interests of the company and our shareholders.”

The deal represents a 64 per cent premium on Aladdin’s closing share price on 5 January, the day before the vendor confirmed it was in continuing talks with Vector.

The transaction is set to close in the next two to three months.