The deal confirms Symantec plans to focus on security side, following last October's announcement that the company would split in two, with its information management and security business going separate ways.
Symantec decided to sell its information management business Veritas Software to focus on bolstering its security business. The deal, which is still subject to customary regulatory approvals and other closing conditions, is expected to close in January 1.
The company has been facing headwinds as weak PC sales hurt demands for its security software, demand for its software products has also fallen as users turn to more advanced products for protection against advanced cyber attacks. The deal, which is the biggest US leveraged buyout this year, would give Symantec a much needed cash influx to help it fund both organic and inorganic growth through strategic acquisitions.
Symantec once ruled the security industry with its antivirus software, but fallen behind as competitions intensified. The company has been waging a brutal two front wars, first with tech companies companies such as Kaspersky, Bitdefender and Microsoft, and second with new rivals such as FireEye, Cylance, palo Alto Networks and CrowdStrike. Symantec's Veritas software has four lines of business namely: backup and recovery software ( include NetBackup and Backup Exec), appliances, information availability, and information intelligence ( this include archiving and e-discovery).
John Gannon, Symantec executive vice president and Veritest general manager, said in a statement: “Since the Board first announced the separation of Veritas, we have been preparing the company to operate independently and evolving our business strategy, while continuing to deliver industry-leading solutions to our customers. We are thrilled to partner with The Carlyle Group and GIC, which have a strong track record of successfully growing businesses and share our dedication to Veritas’ strategy and success”, and also added that: “Veritas will continue to provide next-generation information management solutions to serve the world’s largest and most complex environments, including multiple cloud deployments, managed services and on-premise infrastructure.”
Michael A. Brown, Symantec president and chief executive, said in a statement: “This transaction strengthens our financial foundation, paving the way for Symantec to grow its security business and increase its lead as the world’s largest cybersecurity company. We believe the agreement with the investors, including The Carlyle Group and GIC, delivers an attractive and certain value for the Veritas business, and is in the best interests of all stakeholders.”
Upon closing the transaction, Symantec expects to receive $6.3 billion in net cash for Veritas, and has authorized a $1.5 billion increase to its existing share repurchase program, bring the total value to $2.6 billion, yielding a total of $8.9 billion from the sale. Symantec first revealed its intention to spin off its information management business last year. In October, the company decided to split itself into two publicly traded companies to create a more focused company.
Symantec acquired Veritas for $13.5 billion in 2005, but the deal never paid off. The past few years have been rough for the company, it seen great troubles- a double-digit declines in revenue and profit in its fiscal first quarter ( which ended July 3). And a growing competition in the cybersecurity market.
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