The Symantec Corp, a leader in security software and one of Silicon Valley's oldest companies, announced early Thursday that it would acquire Veritas Software, a maker of data storage programs, to create the world's fourth-largest software company. The all-stock transaction was valued at US$13.5 billion.
The deal, which is expected to close in the second quarter of next year, will give the combined company revenue of US$5 billion next year. Only Microsoft, Oracle and SAP, a German-based competitor, would have greater software sales.
Capping a week that began with Oracle's acquisition of PeopleSoft, a maker of business software, Symantec's acquisition of Veritas is part of a larger consolidation trend in corporate software, driven by the need to cut costs and provide a bundle of products. The merger would create a one-stop provider of tools for data storage, security and management, which have become increasingly critical to businesses.
Symantec, best known for the Norton line of security software, has 40 percent of the US$2.7 billion market for antivirus software. Veritas, with revenue of US$1.75 billion last year, is a major supplier of software that corporations use for data backup and archiving.
When the deal is completed, Symantec shareholders will own approximately 60 percent of the combined company, which will continue to operate as Symantec. The new company will have approximately US$5 billion in cash and 13,000 employees worldwide. About 75 percent of the revenue of the combined company is expected to come from corporate business and 25 percent from consumer sales, executives of the companies said.
"Our customers have been looking to consolidate suppliers and eliminate complexity," said Gary Bloom, chairman, president and chief executive of Veritas, who will become vice chairman and president of the combined company. "A single company that can secure and make available all their information represents a unique value proposition."
John Thompson, a former IBM executive who became chairman and chief executive of Symantec four and a half years ago, will run the combined company. According to analysts, Thompson's background gives him a good perspective on the needs of corporate technology managers.
Elsewhere in the industry, Microsoft announced Thursday that it had acquired Giant Software, a privately held maker of security software focused on removing spyware from computers. That deal is likely to put further pressure on Symantec and other companies selling security software.
To many investors and industry analysts, the move signals Microsoft's interest in becoming a dominant player in the lucrative antivirus field.