Original URL: http://www.theregister.co.uk/2004/12/16/symantec_veritas_merger/

Symantec buys Veritas for $13.5bn stock

Security and storage mega-merger

By John Leyden

Posted in Applications, 16th December 2004 14:54 GMT

Security firm Symantec and storage software firm Veritas have agreed to merge. The all-stock transaction is valued at approximately $13.5bn, based on Symantec’s stock price of $27.38 at market close yesterday.

The combined company (to be called Symantec) will be able to do a better job at reducing the complexity of securing and managing information, the two firms said. The transaction is expected to close in the second calendar quarter of 2005 and is subject to customary closing conditions, including approval by the shareholders of both companies and regulatory approvals.

$5bn run rate predicted for Daddy of Data Protection

By merging with Veritas, Symantec will expand its combined revenue base and create a company with "greater financial scale and resources". The aggregate revenue of the combined company is expected to be approximately $5bn for FY2006, which begins in April 2005 and ends in March 2006. Three quarters of the revenue of the combo is expected to come from enterprises, with consumer products making up 25 per cent of overall sales. The enlarged company will have approximately $5bn in cash.

Symantec specializes in anti-virus and network security applications, while Veritas is a major player in the data backup and storage software markets. Put together the combined firm will be the ‘Daddy of Data Protection’.

Veritas has been mentioned as a frequent acquisition target over recent weeks. Companies such as Sun Microsystems, EMC, Hitachi, IBM and Oracle have been named as possible suitors. Oracle has done much to drive consolidation in the software industry by picking up PeopleSoft and threatening to buy more firms. Veritas has long said it can grow at a steady pace on its own but recent accounting problems hammered its share price (from a 52-week high of $40.68 to below $28), making it a more attractive target.

Musical chairs

Under the agreement, Veritas stock will be converted into Symantec stock at a fixed exchange ratio of 1.1242 shares of Symantec stock for each Veritas share. Upon closing, Symantec shareholders will own approximately 60 per cent and Veritas shareholders approximately 40 per cent of the combined company.

John Thompson, chairman and chief executive officer of Symantec, will continue as chairman and CEO of the combined company. Gary Bloom, chairman, president and chief executive officer of Veritas, will be vice-chairman and president. The board directors will include six members of Symantec’s current board and four from Veritas’ current board for a total of 10 members. ®

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