U.S. computer security group NortonLifeLock announced Wednesday that it has reached an agreement to buy Czech rival Avast for more than $8 billion to create a consumer antivirus giant. NortonLifeLock said in a statement that the deal values Avast at between $8.1 billion and $8.6 billion, depending on the financial terms agreed by the Czech’s shareholders. The new entity will have more than 500 million users worldwide.
The two groups have reached an agreement on a merger after having mentioned being in advanced discussions in July. The combination is expected to generate $280 million in cost synergies per year. Avast shareholders will own between 14% and 26% of the new entity. “This transaction is a huge step forward in computer security for consumers,” said Vincent Pilette, CEO of Norton. His group assured in July that the two companies had the same vision of the market and are very complementary, especially on a geographical level.
3.5 billion dollars in annual sales expected
For Avast CEO Ondrej Vlcek, the merger will allow both groups to grow further “at a time when hacking threats around the world are growing, even as the use of IT security products remains low.” In particular, the pandemic has led to an increase in the risk of hacking with the rise of telecommuting on devices that can be more vulnerable to computer attacks.
The new group will be based in both Prague, Czech Republic and Tempe, Arizona. It will be listed on the Nasdaq in the United States. It will have annual sales of approximately $3.5 billion and current operating income of $1.8 billion, with nearly 4,000 employees. Both groups believe that double-digit sales growth is possible over the long term.
Founded in 1988, Avast is one of the world’s largest security software groups and offers a range of products to businesses and individuals to protect their computers against viruses and other computer attacks. Like Avast, NortonLifeLock (formerly Symantec) has refocused on consumer security products after the 2018 sale of its enterprise security division to semiconductor group Broadcom. The Czech group had entered the U.K. market in 2018, and its takeover by NortonLifeLock should see the flagship FTSE-100 index miss out on one of its few technology companies.
In addition, competition authorities may want to look into the deal, especially as Norton has already been targeted for its practices of automatically renewing contracts.