The discussions between security vendors NortonLifelock and Avast that The Register reported had reached an advanced stage in July have proved fruitful, to the tune of more than $8 billion.
While the deal has been styled as a merger, it will see NortonLifelock acquire all Avast shares and result in the combined companies listing on NASDAQ, rather than Avast’s current London Stock Exchange home.
The companies’ canned statement says their respective boards “believe that the merger has compelling strategic and financial rationale and represents an attractive opportunity to create a new, industry-leading consumer Cyber Safety business”.
Investors have been advised the merger will “enhance the financial profile of the combined company through increased scale, long-term growth, cost synergies with reinvestment capacity and strong cash flow generation supported by a resilient balance sheet”. Double-digit earnings per share accretion has been forecast for the first full year following completion of the merger, as has “double-digit revenue growth in the long-term”.
All of which may or may not come to pass. A shorter-term incentive, as described in Avast’s information for investors [PDF] is that the deal represents a 20.7 per cent premium over its share price.
Avast’s CEO Ondřej Vlček is expected to join Norton LifeLock as President and join its board. Pavel Baudiš, a co-founder and current director of Avast, is expected to become an independent director of Norton LifeLock.
The combined companies will have quarterly revenue of around $900 million, based on each outfit’s most recent reporting.
The consumer and small business security market is complicated by the presence of Windows Defender in every copy of Windows, at no extra cost, as it obviates the need for dedicated security software. NortonLifeLock and Avast are the top and second-placed players respectively, and will emerge with around 25 per cent of the market.
Investors appear to like that idea: NortonLifeLock shares jumped almost five per cent after NASDAQ closed. ®