After talks, NortonLifeLock and Avast have reached an advanced stage in a deal that could be worth $8 billion.
The deal has been dubbed a merger of sorts but will see NortonLifeLock acquire all of Avast’s shares and list the combination of both companies on NASDAQ rather than Avast’s current home on the London Stock Exchange.
In a statement by the companies, the respective boards say that they believe the merger has ‘compelling strategic and financial rationale.’ They called it an opportunity to create a new industry leader in the cybersecurity business.
What is in it for the investors?
Investors in both companies have been told that the merger will enhance the financial profile of the combined company through scaling up, focusing on long-term growth, as well as “cost synergies with reinvestment capacity and strong cash flow generation supported by a resilient balance sheet.”
With double-digit earnings per share accretion forecast for the first full year after the merger is complete, it may not be the hardest argument to make to investors.
In addition to double-digit annual growth, the resulting company is also projected to have double-digit revenue growth in the long term.
Will it happen?
That is the question now, isn’t it? The deal may go through or fall through. If it does go through, Avast’s CEO Ondřej Vlček will join Norton LifeLock as the president and be on its board. The current co-founder and director of Avast will be made an independent director of NortonLifeLock.
Combined, the companies could pull in about $900 million in quarterly revenue, based on each of the companies’ most recent financial reports.
Being number 1 and 2 in the cybersecurity market and with Windows Defender doing most of the defending, combining makes some sense since it hands the combined company 25% of the market share in the segment.