Antivirus vendor NortonLifeLock this afternoon said it will merge with Britain's Avast PLC in a transaction combining cash and stock in two different options, totaling between $8.1 billion and $8.6 billion in stock.
That value is roughly equivalent to the value in U.S. dollars of Avast's enterprise value, which takes into account its cash and debt, of £6.5 billion, based on the closing price of Avast stock tuesday of £5.68 on the London Stock Exchange.
The two companies said in the joint press release that their respective boards of directors see an opportunity to "create a new, industry-leading consumer Cyber Safety business, leveraging the established brands, technology and innovation of both groups to deliver substantial benefits to consumers, shareholders, and other stakeholders."
The two companies said the deal will bring together product lines that are broadly complementary, while giving the combined company a user base of over half a billion customers. The deal will broaden the geographic market coverage of the combined company. In addition, the two expect to realize "$280 million of annual gross cost synergies."
Under terms of the deal, "Avast shareholders will be entitled to receive a combination of cash consideration and newly issued shares in NortonLifeLock with alternative consideration elections available."
Based on NortonLifeLock's closing share price of USD 27.20 on July 13, 2021 (being the last trading day for NortonLifeLock shares before market speculation began in relation to the merger on July 14, 2021, resulting in the commencement of the offer period), the merger values Avast's entire issued and to be issued ordinary share capital between approximately USD 8.1B and USD 8.6B, depending on Avast shareholders' elections.
In a companion deck of slides, the two companies detail two options for shareholders. Option one is to receive 31% of the deal in cash and 69% in stock, option two is to receive 90% in cash and 10% in stock.
NortonLifeLock CEO Vincent Pilette called the deal "a huge step forward for consumer Cyber Safety" that he said "will ultimately enable us to achieve our vision to protect and empower people to live their digital lives safely."
Added Pilette, "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."
Said Avast CEO Ondřej Vlček, "At a time when global cyber threats are growing, yet cyber safety penetration remains very low, together with NortonLifeLock, we will be able to accelerate our shared vision of providing holistic cyber protection for consumers around the globe."
Added Vlček, "Our talented teams will have better opportunities to innovate and develop enhanced solutions and services, with improved capabilities from access to superior data insights. Through our well-established brands, greater geographic diversification and access to a larger global user base, the combined businesses will be poised to access the significant growth opportunity that exists worldwide."
Pilette, and NortonLifeLock's CFO, Natalie Derse, will remain in those positions in the combined company. Avast CEO Vlček will join NortonLifeLock as President and will join the Board of Directors. Pavel Baudiš, a co-founder and current director of Avast, is expected to join the Board as an independent director, the companies said.
NortonLifeLock, formerly the consumer security technology arm of Symantec, separated from Symantec when the enterprise security business was purchased by Broadcom in late 2019.
Eleven-year-old Avast focuses on software for consumers and small and medium businesses.
The take-out price represents a multiple of roughly 9.6 times projected revenue this year for Avast of £678 million, and a multiple of projected Ebitda profit of 17 times.