In a deal that joins two high-profile players in the security software industry, the consumer cybersafety specialist
late Tuesday announced an agreement to merge with the antivirus software provider
in a stock and cash deal valued at up to $8.6 billion.
Under terms of the deal, Avast (ticker: AVST.UK) shareholders can choose to receive either $2.37 in cash plus 0.1937 Norton LifeLock shares (NLOK) for each Avast share, or $7.61 a share in cash plus 0.0302 Norton shares. At Tuesday’s closing price for Norton shares, the deal would value Avast at between $7.15 and $8.34 a share. Avast holders will own between 14% and 26% of the combined company, depending on shareholder preference for compensation.
The deal values Avast’s equity at between $8.1 billion and $8.6 billion.
Norton said the majority equity option provides an opportunity to participate in long-term value creation from the deal, while the majority cash option offers “immediate liquidity.” The company added that Avast’s directors, who own 36% of Avast’s shares, have pledged to support the deal and have chosen the majority equity option.
Norton said it would fund the cash portion of the deal in part with $5.35 billion of new debt at a blended rate of 2%. The company also said it plans a postdeal stock-repurchase plan of up to $3 billion.
The combined company will have dual headquarters in Tempe, Ariz., and Prague. Vincent Pilette will remain CEO of Norton, with Avast CEO Ondřej Vlček to become president.
“This transaction is a huge step forward for consumer cyber safety and will ultimately enable us to achieve our vision to protect and empower people to live their digital lives safely,” Pilette said in a statement. “With this combination, we can strengthen our cyber safety platform and make it available to more than 500 million users.”
Norton said the deal should drive “double-digit EPS accretion within the first full year following completion” and double-digit revenue growth in the long term. The company expects to realize $280 million in annual cost synergies.
NortonLifeLock shares on Tuesday gained 1%, to $24.15. In late trading, the stock added 3.9%, to $25.08. Avast shares in London slipped 1.2%, to 568.40 pence.
Write to Eric J. Savitz at email@example.com