Worawut - stock.adobe.com
NortonLifeLock and Avast joining forces in $8 billion merger
The combined company from NortonLifeLock and Avast will be dual-headquartered in Arizona and Prague, and will serve 500 million users, including 40 million direct customers.
NortonLifeLock is planning to merge with Avast in a deal worth more than $8 billion, the enterprises announced Tuesday.
Avast, based in Prague, and NortonLifeLock, based in Tempe, Ariz., are competitors in the consumer antivirus industry. Both have antivirus and VPN products at the forefront of their offerings, but there are distinctions. Avast is famous for its free antivirus offering as well as its computer performance software, while NortonLifeLock has a large identity protection presence.
According to the announcement, the combined company will serve 500 million users, including 40 million direct customers.
Current Avast shareholders will be given two compensation options: a majority cash option and a majority stock option. Depending on shareholder elections, the announcement says, the deal will be valued between $8.1 and $8.6 billion. Moreover, Avast shareholders will own between 14% and 26% of the newly combined company.
The name of this combined company is to be determined, and the merger is expected to complete in mid-2022.
According to the recommended merger filing available with the press release, the boards of the two companies "believe the merger has compelling strategic logic and represents an attractive opportunity to create a new, industry leading consumer cyber safety business, leveraging the established brands, technical expertise and innovation of both groups to deliver substantial benefits to consumers, shareholders and other stakeholders."
When the merger closes, Avast CEO Ondrej Vlcek will join NortonLifeLock as president and join the company's board. In addition, Avast co-founder and board member Pavel Baudiš is expected to join the NortonLifeLock board as an independent director. NortonLifeLock CEO Vincent Pilette and CFO Natalie Derse will remain in their positions with the new company.
The combined company will be dual-headquartered in Prague and Tempe, and will be listed on NASDAQ; NortonLifeLock is currently listed on NASDAQ under NLOK.
NortonLifeLock has had a complicated corporate history leading up to the Avast merger. The company was previously part of Symantec, which was founded in 1982 and known for its Norton antivirus products. In the early 2000s, Symantec became one of the largest cybersecurity vendors in the industry, though the company struggled more recently with a number of executive changes and corporate restructures. In 2014, Symantec split its company into two publicly traded companies: a data management enterprise and a security enterprise.
The enterprise security division was acquired by Broadcom in 2019, while the remaining consumer antivirus and identity production business changed its name that year to NortonLifeLock.
Omdia principal analyst Eric Parizo told SearchSecurity that he believes the deal is "mostly about NortonLifeLock expanding its total addressable market."
"After selling its enterprise units, [NortonLifeLock's] growth options have been somewhat limited," Parizo said. "The acquisition of Avast gives the company not only a much larger customer base overnight, but also an opportunity to expand its footprint considerably, particularly in Europe, where Avast has long dominated and NortonLifeLock hasn't been nearly as strong."
He added that while the price tag is "surprisingly high," NortonLifeLock must be confident in its ability to leverage the combined organization and accelerate growth. "I would anticipate that selling the LifeLock identity theft protection technology into the Avast customer base is a big part of that projection," Parizo said.
Dave Gruber, senior analyst at Enterprise Strategy Group, a TechTarget company, said the merger was likely driven by competitive forces in the antivirus market, specifically Microsoft.
"As Microsoft continues investment in its free, embedded Windows Defender solution, market pressure builds for both Norton and Avast, requiring expanded use case support around consumer data privacy and external security services that resonate with consumers as they face continued fears around personal data theft, impersonation and fraud," Gruber said in an email to SearchSecurity. "As a new merged entity, NortonLifeLock has a shot at steering clear of Microsoft with their expanded, cloud-delivered offerings."
SearchSecurity asked NortonLifeLock if they could offer more insight into the decision to merge with a competitor that has an overlapping antivirus product. A spokesperson for the company declined to comment beyond referring SearchSecurity to previously released merger announcement and investor materials.
In the press release, NortonLifeLock referenced the merger's potential to "strengthen geographic diversification and facilitate expansion into the SOHO [small office/home office]/VSB [very small business] segments."
Alexander Culafi is a writer, journalist and podcaster based in Boston.