Mobile VPN service providers NetMotion Wireless and Padcom announced a merger agreement to create the largest company in the industry, the companies announced today.

NetMotion and Padcom have been rivals as the largest pure-play companies in the burgeoning mobile VPN industry. In fact, the two companies were tangled in a two-year-long intellectual-property litigation battle that ended in March, when a district court ruled that NetMotion infringed on two Padcom patents in developing its mobile VPN solution.

“The recent jury verdict definitely got us talking in more earnest terms with each other,” said John Knopf, NetMotion’s director of marketing. “In the end, while it really wasn’t the reason to merge, it definitely was the reason to talk about those possibilities.

“The more that we looked at each other, realized the capabilities that each company had, the personnel involved and the market opportunity, it just made so much sense to put our resources together and attack the market rather than fight it out in court.”

To be known as NetMotion Wireless, the company’s primary VPN solution will be based on NetMotion’s Mobility XE platform, with “best-of-breed features” in Padcom’s TotalRoam offering being integrated into the offering. The new company will have more than 80 employees.

“Between the two companies, I think we have some of the top talent in the industry,” said Michael Van Patten, vice president of Padcom. “Going forward, it’s going to be better support for the customers and certainly quality products down the road.

NetMotion President and CEO Bob Hunsberger echoed this sentiment in a prepared statement.

"This merger is about two companies coming together to seize the opportunity in a hot market space," said Hunsberger, who will retain both his titles in the new company. "Together, we have the industry's leading mobile VPN technology and more than 900 customers. I believe we have more engineering resources dedicated to creating world-class mobile VPN solutions than any other firm."

Former Padcom Chairman Gordon Smith will chair the board of the new company. Former Padcom CEO Scott Stone will not be part of the new company, Knopf said.

Existing NetMotion and Padcom public-safety and enterprise customers will see their current products supported for at least two years.

“The new company is very committed to all the customers—market share is a big deal for us, and we want happy customers,” Knopf said. “So we’re going to do everything we can to keep all those customers around and very happy.”

In fact, the latest upgrade to the TotalRoam solution will be released within the next “couple of weeks,” Van Patten said.

Knopf said the boards for both of the private companies have approved the merger and that integration already has begun. The deal is expected to close “on paper” next week, he said.