Global consumer cyber safety company NortonLifeLock and global digital security and privacy company Avast yesterday announced they have agreed to merge in a primarily stock-based deal that will see Avast shareholders holding about 14 per cent of the merged company’s shares.
The firms say that the merger will result in a new consumer Cyber Safety business which will use the established brands, technology, and innovation of both groups to deliver benefits to consumers, shareholders, and other stakeholders. It will combine Avast’s capabilities in privacy and NortonLifeLock’s capabilities in identity, creating a product portfolio that moves beyond core security and towards adjacent trust-based solutions.
According to Allie Mellen, an industry analyst covering SecOps at Forrester Research, the merger is the right step for both companies in order to be able to stand out from other antivirus providers.
“The announced merger of NortonLifeLock and Avast is surprising, yet unsurprising. Consumer antivirus solutions are under deep strain as users turn to built-in operating system security capabilities in lieu of 3rd party solutions. As Microsoft and Apple prioritize native security built into their products, traditional antivirus providers have no choice but to look for new features and popular offerings that may differentiate them,” she noted in an emailed statement to channeldailynews.com.
Melle, however, also says “this merger is unlikely to stop the bleeding when it comes to loss of customers for traditional antivirus players due to the convenience and credibility of larger brands.”
The two companies began merger talks on July 14. According to the terms of the agreement, Avast shareholders will be entitled to receive a combination of cash consideration and newly issued shares in NortonLifeLock, with alternative consideration elections available.
“This transaction is a huge step forward for consumer Cyber Safety and will ultimately enable us to achieve our vision to protect and empower people to live their digital lives safely,” said Vincent Pilette, chief executive officer of NortonLifeLock, in an August 10 press release. “With this combination, we can strengthen our Cyber Safety platform and make it available to more than 500 million users. We will also have the ability to further accelerate innovation to transform Cyber Safety.”
Based on NortonLifeLock’s closing share price of CA$34 on July 13, 2021 (the last trading day for NortonLifeLock shares before the commencement of the offer period), the merger values Avast’s entire issued and to be issued ordinary share capital between approximately CA$10.13 billion and CA$10.75 billion, depending on Avast shareholders’ elections.
On completion of the merger, the combined company will serve over 500 million users, including approximately 40 million direct customers It will be dually headquartered in Prague, Czech Republic, and Tempe, Arizona, with a significant presence in the Czech Republic. Pilette will remain the chief executive officer of the new business. Avast’s chief executive officer, Ondřej Vlček, is expected to join NortonLifeLock as president and become a member of the NortonLifeLock board of directors. In addition, Pavel Baudiš, a co-founder and current director of Avast, is expected to join the NortonLifeLock board as an independent director.
