Symantec to Buy Veritas for $13.5B - EnterpriseStorageForum.com

Symantec to Buy Veritas for $13.5B

UPDATED: Symantec agreed to acquire Veritas Software for $13.5 billion in stock, a deal that would create one of the largest brands in the security and back-up software market.

Symantec is a leading security software provider. The Cupertino, Calif., concern has been looking for ways to grow and diversify its portfolio at a time when rivals are adding new weapons to attack viruses and assaults from malicious users.

The leader in back-up software to help companies get back on their feet in the case of power outages or disasters that threaten corporate data, Veritas has been evolving as a utility computing company.

This has led the Mountain View, Calif., company to acquire software specialists that specialize in computing availability, such as server provisioning, application virtualization and application performance management.

Ideally, a combination of Symantec and Veritas will give businesses and consumers a more effective way to secure and manage the information they hold on computing machines, from desktops to servers in data centers.

Symantec CEO and Chairman John W. Thompson and Veritas President, Chairman and CEO Gary Bloom discussed the motives for the deal on a conference call Thursday. They said the markets for security and computing availability software are converging.

"While the regulatory environment requires increased information security, future business opportunities require more and more information to be made available to a greater number of people," Thompson said. "This dichotomy is driving the obvious convergence between securing the infrastructure and ensuring the information availability."

"As our customers have begun to migrate to a utility computing model, availability and security of information have emerged as their top priorities," Bloom said. "At the same time, our customers are looking to consolidate suppliers and eliminate complexity. A single company that can secure and make available all their information represents a unique value proposition."

Forrester Research said in a note to journalists it feels a merger between Symantec and Veritas would be good for both companies and their shareholders by opening many new revenue channels while closing none.

The Cambridge, Mass., outfit said Symantec is re-inventing itself into a major enterprise security management vendor with acquisitions and new marketing drives, but acquiring Veritas allows it to fill some gaps. Conversely, Veritas is a successful backup and archiving vendor looking for a way to penetrate the security market.

These factors alone make the deal highly synergistic.

Thompson said the move positions Symantec as the fourth-largest software company in the world, with projected revenue of $5 billion for fiscal year 2006. He expects 75 percent of the revenue to come in from enterprise customers, with the remaining 25 percent coming from sales of security software to consumers.

Symantec will also have $5 billion in cash and 13,000 employees, making it one of the largest software companies in the industry. Citing IDC estimates, Thompson said the company will have a $56 billion market opportunity by 2007.

While Thompson and Bloom have characterized the deal as a friendly merger, Symantec is in the driver's seat. The new business will operate under the Symantec name, with Thompson continuing to serve in the same capacity. Bloom will be vice chairman and president of the company, responsible for sales, services and support activities.

The board of directors of the combined company will include six members of Symantec's current board and four from Veritas.

The companies said in a statement the purchase price was based on Symantec's stock closing price of $27.38 per share for Dec. 15. Under the agreement, Veritas stock will be converted into Symantec stock at an exchange rate of 1.1 shares of Symantec stock for each share of Veritas stock.

The deal is expected to close in the second quarter of 2005. Should it succeed, Symantec shareholders will own 60 percent and Veritas shareholders approximately 40 percent of the combined entity.


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