Wednesday, September 3, 2014

AntiVirus Firm AVG Technologies To Buy Mobile Security Company Location Labs

The Czech-founded, Amsterdam-based security company AVG Technologies N.V. ( AVG ) announced a definitive agreement to acquire privately-held Location Labs, a leading mobile security company. Under the agreement, AVG will pay approximately $140 million initially, plus up to an additional approximately $80 million in cash consideration over the next two years based on the achievement of certain performance metrics and milestones, the company expects the deal to be neutral to EPS in 2015. 

Location Labs  has a good mobile business; it has more than 1.3 million monthly paying subscribers for its mobile safety and security products. The company is profitable and quite popular in the market; currently it generates around $33 million in annual revenue. It has also raised around $26 million in funding, with its last funding round being back in 2007. The acquisition is aimed at beefing up AVG’s mobile credentials and solidifying the company's strong position in the market.

AVG itself already has a massive 182 million active users — with 85 million using its mobile apps, the addition of Location Labs would significantly broaden AVG’s position as the online security company by accelerating its mobile business. According to a statement, AVG expects the combined strengths would pull something between $60 to $70 million in mobile business next year, and around $100 million in 2016, with a high hoped-for combined user base of around 250 million or even more.

Location Labs has deals with all 4 major U.S. carriers, and has already established a range of carrier partnerships in the US market, offering a swathe of security products for phone users — from antivirus to cloud backup solutions. It's mobile subscription services are among the biggest in the market. 

Location Labs would give AVG something big, it add industry partnerships, effective mobile monetization strategy, strategic technology and massive user base to AVG's mobile offerings. Location Labs Chief Tasso Roumeliotis will continue his work and lead his team, AVG shareholder approval is still needed before transaction can close.

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