NortonLifeLock buys Avast for more than $ 8 billion

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Endpoint Security, Fraud and Cybercrime Management, Fraud Risk Management

The agreement will “strengthen the cybersecurity program”

Doug Olenick (Doug Olenick) •
August 11, 2021

Antivirus and identity protection firm NortonLifeLock confirmed on Tuesday that it had reached a deal to acquire rival Avast for $ 8.1 billion to $ 8.6 billion after announcing in July that a deal was underway.

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No prospective closing date for the transaction has been announced.

Companies say they will combine the strength of Avast in privacy with the identity capabilities of NortonLifeLock to improve their ability to work with smaller offices and home office clients.

“With this combination, we can strengthen our cybersecurity platform and make it available to more than 500 million users. We will also have the ability to accelerate innovation to transform cybersecurity, ”said Vincent Pilette, CEO of Tempe, Arizona-based NortonLifeLock. .

Under the deal, shareholders of Czech Republic-based Avast would receive a combination of cash and newly issued shares in NortonLifeLock. The final price is based on the closing Avast share price of $ 27 on July 13, when news broke that the two companies were discussing a possible deal.

“The merger values ​​the entire issued and to be issued share capital of Avast between approximately $ 8.1 billion and $ 8.6 billion, depending on the election of Avast shareholders,” the companies said in a statement. communicated.

Analysts react

Frank Dickson, vice president of security and trust at research firm IDC, notes that the deal offers the merged companies cost savings, a larger customer base and regional diversity.

“The cost of developing anti-malware solutions is a fixed cost currently borne by two entities. The combination of entities makes it possible to monetize the effort on a greater number of clients, ”he says.

Dickson also points out that integrating Avast into the fold of NortonLifeLock will allow Avast to sell to the retail industry, which he says is a market segment often overlooked by the cybersecurity industry.

“Avast is also the product of a past merger of Avast and AVG. AVG was a leader in the freemium customer acquisition model. So Avast brings expertise in an alternative way to acquire new customers, ”he says.

Strengthening of the antivirus offer

Forrester analyst Allie Mellen sees the deal as NortonLifeLock’s attempt to bolster its antivirus offering.

“Consumer antivirus solutions are under great pressure as users turn to the operating system’s built-in security capabilities instead of third-party solutions,” says Mellen. “While Microsoft and Apple prioritize native security built into their products, traditional antivirus vendors have no choice but to look for new features and popular offerings that can set them apart,” she said. .

Mellen, however, adds: “This merger is unlikely to stop the bleeding when it comes to losing customers for traditional antivirus players due to the convenience and credibility of big brands.”

New look

The new organization will operate under the name NortonLifeLock and will maintain its headquarters in Prague and Tempe. It will be listed on the NASDAQ stock exchange.

NortonLifeLock Pilette will remain as CEO and Natalie Derse as CFO. Ondřej Vlček, CEO of Avast, is expected to join NortonLifeLock as chairman and become a member of its board of directors. Pavel Baudiš, co-founder and current director of Avast, is expected to join the board of directors of NortonLifeLock as an independent director.

Security firm Symantec bought Norton in 1990. In 2016, it added identity theft protection firm LifeLock to its portfolio in a $ 2.3 billion deal. NortonLifeLock was then split in 2019, becoming an independent publicly traded company.

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