Technology security firm, Symantec (NASDAQ: SYMC), agreed to buy private held cybersecurity company, Blue Coat, for $4.65 billion in a cash deal. Shares of Symantec were up almost 7 percent on Monday morning after the company published the acquisition deal. Greg Clark, the Chief Executive of Blue Coat is set to take the vacant CEO position at Symantec since Symantec’s previous CEO Michael Brown left in April because of the company’s disappointing quarterly result.
"Blue Coat brings capabilities from the web and for network-born threats, which combined with what we already offer will provide better protection for our customers," said Ajei Gopal, Symantec's interim president and chief operating officer.
Symantec had undergo a transformation over the past year. Symantec sold off its Veritas Data-storage division to Carley Group for $7.4 billion in January, which gained necessary cash turn around its core security software business.
By buying Blue Coat, 62 percent of Symantec's revenue will now come from enterprise security, and it will be better positioned to compete with security players such as Palo Alto Networks, FireEye and Check Point Software Technologies. Symantec would have $4.4 billion in revenue in FY 2016 with combination of Blue Coat on a pro-forma basis. Symantec is taking on $2.8 billion of new debt and using cash on the balance sheet to fund the acquisition.
Blue Coat had been preparing an initial public offering for later this summer. Its sale marks a quick turnaround for its private equity owner, Bain Capital, which acquired Blue Coat Systems from fellow private-equity firm Thoma Bravo for $2.4 billion last year. It is buying $750 million in unsecured notes in Symantec at a conversion price of $20.41 per share. This is a premium of about 18 per cent on Symantec’s closing price on Friday.
"We enjoyed a very productive partnership, and are excited to be a significant investor in the future of Symantec as the leading cybersecurity company in the world," Bain managing director David Humphrey said in a statement. Humphrey will join Symantec's board as the firm agreed to invest $750 million in convertible notes.