Private Equity Firms Eye $16.4B Buy Of Symantec Consumer Unit: Report

Having private equity firms Permira and Advent International buy Symantec’s consumer unit wouldn't affect the recently announced $10.7 billion sale of Symantec's enterprise security business to Broadcom, The Wall Street Journal reported.


Private equity firms Permira and Advent International are looking to team up and buy Symantec's consumer business for more than $16 billion, according to a Wall Street Journal report.

The transaction would value Symantec at between $26 per share and $27 per share, the Journal reported, and include the company's Norton antivirus and VPN service as well as its LifeLock identity theft protection services. The private equity buy wouldn't affect the previously announced $10.7 billion sale of Symantec's enterprise security business to semiconductor manufacturer Broadcom.

Symantec's stock is up $1.16 (4.96 percent) to $24.63 per share following the publication of the Journal story. Advent declined to comment for this story, while Symantec and Permira didn't immediately respond to requests for comment.

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[Related: $10.7B Broadcom-Symantec Enterprise Deal Creates Software Titan]

Putting Symantec's consumer business in the hands of private equity could reduce the tax bill for the company's shareholders, people familiar with the matter told the Wall Street Journal. It isn't clear exactly how this deal would work, the report noted, and it's far from guaranteed that it'll happen at all.

Should the transaction happen, the Journal said one possibility would be for Boston-based buyout firm Advent International and London-based Permira Holdings to buy all of Symantec and then proceed with the sale of the enterprise business to Broadcom. Another possibility would be waiting for the Broadcom acquisition to close and then buying Symantec's consumer unit alone, the paper reported.

Buying Symantec's consumer business for between $26 per share and $27 per share would value the organization at $16.4 billion, well above the $14.5 billion valuation Broadcom gave to the business when the deal was announced last month. But the Broadcom-Symantec enterprise deal is tax inefficient since it's expected to trigger a special dividend of $12 per share after the deal closes, the paper reported.

As a result, the Wall Street Journal said Permira and Advent believe the extra $1.9 billion premium is justified.

Bloomberg reported in early July that Advent and Permira had teamed up with former Symantec CEO Greg Clark to draw up a competing bid against Broadcom for both Symantec's enterprise and consumer businesses. Bloomberg, though, said its pursuit of Symantec was a long shot since it had thus far been unable to compete on price with Broadcom.

One week later, Broadcom's bid to buy all of Symantec fell through when the two sides couldn't agree on a price. Subsequent talks focused only on the sale of Symantec's struggling enterprise business to Broadcom, eventually culminating in a deal on Aug. 8.

Symantec's consumer business has fared better as of late, contributing 90 percent of operating income and 51 percent of revenue in the company's most recent quarter, which ended June 30. Even though Symantec's enterprise security business made up 49 percent of the company's overall revenue, it generated just 10 percent of the company's operating income in the most recent quarter.