(Bloomberg) – NortonLifeLock Inc. has agreed to buy Avast Plc in a deal valued at $ 8.6 billion, giving the U.S. cybersecurity firm access to one of the world’s largest customers in the sector.
Avast shareholders will receive cash and stocks that value the deal between $ 8.1 billion and $ 8.6 billion, the companies said in a statement on Tuesday. Once the merger is complete, NortonLifeLock CEO Vincent Pilette will remain CEO and the company will have two headquarters in Tempe, Arizona and Prague. Avast CEO OndÅej VlÄek will become chairman and join the board, the companies said.
High-profile ransomware attacks against large corporations and infrastructure providers have increased demand for software to guard against hackers. That, along with more people working remotely, will continue to drive the growth of cloud-based security providers, said Mandeep Singh, analyst at Bloomberg Intelligence.
Read more: Stopping ransomware is a technological battle measured in milliseconds
The deal will significantly increase the number of users of NortonLifeLock, known as Symantec Corp. before selling its corporate security business to Broadcom Inc. in 2019 for $ 10.7 billion. Prague-based Avast has 435 million âfreemiumâ subscribers. It attracts customers to a free basic product and tries to turn them into paid users with more advanced software.
âWith this combination, we can strengthen our cybersecurity platform and make it available to over 500 million users,â Pilette said in the statement.
The two CEOs agreed that the upsurge in widespread and damaging cyber attacks during the pandemic has created new demand for digital security tools and an opportunity for companies to compete for a larger share of cybersecurity revenue.
âThe bad guys have been really, really busy taking advantage of the situation created by Covid-19,â VlÄek said. âThe massive increase in attacks has targeted everyone: businesses, small businesses and consumers. Now is the time to join forces and accelerate the transformation of the entire cybersecurity space. “
Avast shareholders have two choices in the deal – $ 2.37 in cash and 0.19 in NortonLifeLock shares for each Avast share or $ 7.61 in cash and 0.03 NortonLifeLock share for each Avast share. The exchange is based on NortonLifeLock’s closing price of $ 27.20 on July 13, the day before the companies revealed they were in talks.
Avast shares had fallen 6.2% this year before the talks were first published last month. The company said earlier this year that its intention to shift its customer base to one-year subscriptions would hurt first-half billing growth, while its adjusted profit margin would be held back by higher costs. high to move to the cloud. Avast is due to release its financial results on Wednesday.
NortonLifeLock shares fell about 1% in extended trading after closing at $ 24.15 in New York City. The stock has gained 16% this year.
(Updates with Avast CEO commentary in the sixth paragraph.)
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