Done Deal: Symantec, Veritas Reach $13.5B Merger Pact

The accord will reshape the software landscape, creating a channel-friendly security infrastructure powerhouse that will compete with a wide range of rivals from software giant Microsoft to storage kingpin EMC.

Under the definitive agreement, which was unanimously approved by both boards of directors, Veritas shareholders will receive 1.1242 shares of Symantec stock for each share of Veritas stock.

The combined company will operate under the Symantec name with Symantec Chairman and CEO John Thompson remaining as chairman and CEO of the combined company. Veritas CEO and President Gary Bloom will be vice chairman and president of the combined company. The board of directors of the combined company will include six members of Symantec's current board and four from Veritas' current board.

Post-merger, the combined Symantec-Veritas will have significant channel strength in small and midsize businesses and enterprise accounts. The company would have revenue of $5 billion, with approximately 75 percent coming from enterprise business and 25 percent from consumer business. The company will have approximately $5 billion in cash, which could be used for future acquisitions.

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Symantec, Cupertino, Calif., said the move to combine the leader in storage software with the leader in security software will provide enterprise customers with a more effective way to secure and manage their data. The company said the deal creates a powerhouse that will be uniquely positioned to deliver information security and availability solutions across all platforms, from the desktop to the data center, from consumers and small businesses to large organizations and service providers.

"Customers are looking to reduce the complexity and cost of managing their IT infrastructure and drive efficiency with fewer suppliers," said Thompson in a prepared statement. "The new Symantec will help customers balance the need to both secure their information and make it available, thus ensuring its integrity. We believe that information integrity provides the most cost-effective, responsive way to keep businesses up, running and growing in the face of system failures, Internet threats or natural disasters."

The transaction is expected to close in the second calendar quarter of 2005 and is subject to government regulatory approval. The deal is expected to be accretive for Symantec in the first combined year of operations. Non-GAAP earnings per share for this transaction will include the amortization of deal-related intangibles, the write-down of Veritas' deferred revenue, restructuring charges, amortization of deferred compensation and any one-time costs associated with the merger.

"This is one of the most incredible things I've seen in five years of specializing in the sales of network security solutions," said Steve Palange, president of TLIC Worldwide, a Symantec partner in Wakefield, R.I., commenting earlier this week on reports that a deal was imminent. "If my customers can now get Norton, intrusion-prevention software and Veritas backup, I think a lot of companies are going to think twice about not signing onto the single-source solutions wagon."

Palange went on to say that with a Veritas-enhanced arsenal of utilities, Symantec could conceivably challenge vendors such as Computer Associates International for serious market share in the storage and network management niches.

Bill Rutledge, software business development manager at CompuCom Systems, Dallas, said the proposed acquisition delivers perfectly on Symantec's multifaceted initiative to mix security and storage into what the vendor dubbed "information integrity."

"We can make information secure, but if it's not available at all times, then what good is it?" asked Rutledge, whose company currently sells products from both Symantec and Veritas. "To think that one vendor could integrate security, availability, disaster recovery and storage, that would change the face of the industry as we know it."

Other solution providers agreed. Amy Rao, CEO of Integrated Archive Systems, a Palo Alto, Calif.-based storage solution provider, said there's a sizable market for better integrating security into other software products, and such an acquisition would push it along. "We'd love it," she said.

Rao, who was just finishing her Christmas card to Thompson when contacted by CRN, said the move would bring nothing but benefits to Mountain View, Calif.-based Veritas and its channel if for no other reason than it would align the group under the Thompson's leadership.

"John Thompson is one of the finest CEOs ever," Rao said. "He would do a tremendous job at nurturing Veritas."