Investments

Symantec Sets Up To Buy Blue Coat Systems For $4.65B

Symantec is starting the week with a bang, announcing its intention to snap up Blue Coat Systems in a $4.65 billion deal that will broaden the security tech giant's portfolio of cyberdefense tech and bring along a new CEO for good measure.

Greg Clark, CEO of Blue Coat, will be stepping into the leadership position at Symantec when the deal closes some time between now and October, according to a jointly released announcement. The coming installation of Clark finishes off a CEO search process that has been ongoing since Michael Brown stepped down after a disappointing financial performance during the first quarter of 2016.

Bain Capital, which currently controls Blue Coat, is slated to invest $750 million of the proceeds back into the combined company in the form of debt convertible into equity. Silver Lake will invest $500 million in convertible debt on top of $500 million it already agreed to put into Symantec this year. Blue Coat is currently used by more than 15,000 firms worldwide to block dangerous or otherwise inappropriate web content.

Blue Coat also brings value to Symantec as it is a cloud computing firm that delivers its solutions over the web and one successful enough that it had gotten as far as filing for an IPO earlier this year. Analysts’ estimates for the value of the company, should it have taken that route, were in the range of what Symantec is paying.

“This is an extremely compelling combination,” Symantec Chairman Daniel Schulman noted in a joint interview post-announcement with Clark.

“We now are going to have the scale, the portfolio of products and services and the resources necessary to protect customers against a constantly evolving threat landscape."

“There is virtually no product overlap between Blue Coat and Symantec,” Clark added.

The acquisition comes as Symantec is having difficulty integrating its services into the modern security marketplace, despite growing concerns from all corners about the issue. The firm saw a 2 percent drop in the sales of its corporate security products; revenue in the company’s consumer business dropped 9 percent. That has brought on a 27 percent share price decline over the last year.

This deal will be the largest Symantec has made since purchasing Veritas Software in 2005 and comes as one of a series of steps Symantec has pursed as it tries to work a comeback.

In January, Symantec sold off its Veritas data storage division to Carlyle Group for $7.4 billion, though it bought the firm for $10 billion.

Some layoffs are expected following the acquisition.

“I think, inevitably, in any combination of companies, there are some redundancies,” Schulman said.

Estimates say the combined company's 2016 revenue would clock in at about $4.4 billion in FY 2016, over 60 percent of which comes via corporate security. Symantec ultimately expects $150 million of cost savings from the deal.

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