Symantec Corp. will buy Veritas Software Corp. in an all-stock transaction, the companies announced Thursday. Based on Wednesday’s closing stock prices, the deal values Veritas at around US$13.5 billion, they said.
The deal is expected to close in the second quarter of 2005, subject to customary closing conditions. Symantec shareholders will own around 60 per cent of the merged company, which will retain the Symantec name, the companies said in a joint announcement.
Veritas, based in Mountain View, Calif., sells backup, archiving and file system software. Symantec, of Cupertino, Calif., sells software to protect home and office computer systems and networks, including firewalls and tools to detect viruses and network intrusions. By joining forces, they will be able to help enterprise customers secure their information better, the companies said. About three-quarters of the combined company’s revenue will come from enterprise products and services, they said.
The companies might have a hard time convincing industry insiders that their rumoured merger will be relevant to customers.
“I would say this merger is in pursuit of an imagination of a customer rather than a real customer,” said William Hurley, senior analyst at the Enterprise Application Group in Portland, Ore.
While Hurley said Symantec has been active on the management side by partnering with system management vendors such as BMC Software Inc., Hurley thinks a merger with Veritas is not the right strategy in this case. “Certainly a robust partnership would have made more sense,” he said. “Symantec has some interesting identity management and change management products and patch- and virus-updating tools, but an alliance or strategic partnership [with Veritas] is more wise in bringing confidence to the customer than an out-and-out merger.”
Symantec may be trying to bulk up its enterprise software business, as it watches Microsoft Corp. begin to play a more active role in the consumer security software business, said Mateo Millet, an analyst at Avian Research LLC, in Boston.
Michael Smith, director, data utility at Teranet Inc. in Toronto, was surprised this week to learn of the possible merger. Teranet uses Symantec’s Norton antivirus on both its desktops and its servers, as well as using Veritas’ Volume Manager and NetBackup for at least the past five years.
He doesn’t share Hurley’s concerns that the merger could hurt his firm’s relationship with Veritas or the quality of Veritas’ products.
“From our point of view, we don’t expect to see any difference. I expect it to be business as usual,” he said. He said Teranet will simply wait to see what emerges if the takeover occurs but has no plans to stop using products from either vendor.
Symantec chairman and chief executive officer John Thompson will continue in that role, while his opposite number at Veritas, Gary Bloom, will become vice-chairman and president of the combined company. The new board will be composed of 10 members, six chosen from Symantec’s board and four from the Veritas board, the companies said.
Both boards of directors approved the deal, which now requires the approval of regulators, and of the shareholders of both companies. Symantec offered Veritas stockholders 1.1242 Symantec shares for each Veritas share they hold. With Symantec’s stock price standing at $27.38 (all figures U.S.) when the market closed Wednesday, that values the deal at around $13.5 billion, the companies said.
This is not Symantec’s first acquisition this year — although it is by far the largest. It announced plans to acquire antispam software company Brightmail Inc. of San Francisco for $370 million in May, and security consultant @Stake Inc. of Cambridge, Mass., in September. Last week, it announced plans to acquire intrusion system Platform Logic of Glenwood, Md.