McAfee LLC (McAfee), a California-based cyber-security software firm, has shown interest to work with its rival NortonLifeLock (Norton). McAfee is willing to invest $ 2.41 billion to combine its consumer business with NortonLifeLock, an Arizona-based Symantec’s subsidiary software firm.
The deal for Combining Consumer Business Units
Norton had been looking to raise funding for $ 16.4 billion. According to the Wall Street Journal (WSJ), in addition to McAfee, two private firms Permira and Advent International have announced plans to participate in Norton’s bid for funds.
McAfee decided to participate in the bid a month after Broadcom Inc. acquired Symantec’s Enterprise Security business for $ 10.7 billion in August 2019. However, Symantec’s consumer business unit, which has been working under NortonLifeLock, remained independent.
According to Bloomberg, McAfee, a TGP and Intel-owned company, since August 2019, has been working with Morgan Stanley, Bank of America, and a couple of syndicate banks for funding it’s a collaboration with Norton.
McAfee was worth $ 7.6 billion when Intel acquired McAfee back in August 2010. With this further funding from investors, the company is now worth more than $ 8 billion.
According to the WSJ reports, “the spotty performance of recent technology IPOs had prompted McAfee to more seriously consider other options, including an outright sale. Under such a scenario, McAfee’s enterprise and consumer units could potentially go to different buyers, which would put the company in the same boat as Symantec.”
Uncertainty about the Deal
It is likely that the deal for combining with Norton will take time to reach a final agreement and no deal is likely to take place till the end of 2019. WSJ explained reasons for delaying the deal, “That’s because six of NortonLifelock’s 12 directors, including Chairman Daniel Schulman, are slated to leave after the company’s annual meeting on December 19.”
In November, Vincent Pilette replaced Richard Hill. Pilette and became the CEO and commented, “NortonLifeLock needs to eliminate $1.3 billion in costs, with the firm already cutting its headcount by 8% over the previous quarter and putting four or five corporate campuses up or sale.”
Furthermore, NortonLifeLock’s board has to recruit new executive directors at the company’s annual meeting, which is likely to be held after the end of 2019. After the news of the deal with McAfee, NortonLifeLock’s stocks reached 3.94% in after-hours trading to $26.40 per share, which is the highest gaining of the company’s stock since May 2018.
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