Reports: Symantec May Sell Veritas To Private Equity Firm
Symantec may be exiting the storage business a lot faster than expected.
Bloomberg News and Reuters are both reporting that Mountain View, Calif.-based Symantec is in talks to sell its Veritas storage business to the Carlyle Group, a Washington, D.C.-based private equity firm.
Bloomberg late Tuesday first reported that Symantec is looking to sell its Veritas storage and information management business to Carlyle for between $7 billion and $8 billion. Symantec had been trying to sell Veritas to strategic investors for months, Bloomberg reported.
Reuters on Wednesday reported on the potential sale of Veritas to Carlyle based on its own sources.
Both sources said the deal is not final, and that the talks could result in no actual sale.
Security vendor Symantec last fall said it would separate its storage business into a separately traded company carrying the old but still well-known "Veritas" moniker. The separation was expected to be complete this November.
Symantec in 2005 acquired Veritas in a move the company said would combine security and storage technologies.
Daniel Ives, a researcher at FBR Capital Markets, an Arlington, Va.-based financial analyst, wrote in a Wednesday research report that a deal by Symantec to sell Veritas to the Carlyle Group at this time instead of waiting for the original separation would be a good move for Symantec despite a potential increase in the tax burden.
"It would be a major liquidity event for Symantec and add more dry powder to help bulk up its next-generation cybersecurity offerings (M&A, R&D, etc.) and put some much needed fuel in the company's growth engine. Furthermore, given that Symantec has been taking steps to separate the businesses ... a sale of Veritas could help accelerate the separation of the units," Ives wrote.
Reports of the potential sale come a day after Symantec and Veritas released NetBackup 7.7, the latest version of the company's flagship data protection software.
Symantec had not responded to CRN requests for more information about a potential sale of Veritas by publication time Wednesday. A Carlyle Group spokesperson replied via email to CRN that the company had no comment on the news.
The Symantec security business and Veritas information management business never really integrated well, solution providers told CRN.
There was no real focus on data protection with Symantec, one solution provider told CRN last week under condition of anonymity.
"Symantec, since it acquired Veritas, brought two sets of sales reps into one," the solution provider said. "And it's clear when talking to them what side they came from. They sell what they know. It will be nice to have a separate Veritas sales team with people who can come in and say, 'You hear about this solution?' or 'You know about that service?' "
Another solution provider told CRN under condition of anonymity that Veritas' becoming independent of Symantec is a big positive for the industry and the channel.
"Veritas was never really aligned with Symantec," the solution provider said. "Now the two are much better aligned separately with their products and directions. As Symantec, there were just too many messages to get across to customers."
Kent Kellough, vice president for the western area of Advanced Systems Group, a Denver-based solution provider and longtime Symantec and Veritas partner, told CRN that the split into two companies, regardless of how it's done, is the right move.
"Back in the day when Veritas was a stand-alone company, its NetBackup solution ruled the data protection market," Kellough said. "But after Veritas was acquired by Symantec, it got lost in the shuffle. I don't think Symantec managed the acquisition very well."
Going private by means of an acquisition by a private equity firm could be good for Veritas, if history is any indication, Kellough said. He cited Dell's 2013 move to go private as an indication of what can be achieved.
"Look at Dell," Kellough said. "When it went private, things turned out very well. Dell is embracing the channel in a very big way."
FBR's Ives agreed that the breakup of Symantec and Veritas is long overdue.
"The current security/storage structure under one roof has been counterproductive over the past decade, in our opinion, given Symantec's execution issues in the field with this unique security/storage approach that has been a contentious topic with investors for years," he wrote.
When Veritas finally separates from Symantec, it will be ready on the channel front, said Mark Nutt, global channel chief for Veritas.
Nutt, who spoke to CRN earlier this week in preparation for the release of Veritas NetBackup 7.7, said that the Symantec and Veritas sales teams were separate in April, and that the two are slated to be operationally separate in October, with the legal separation planned to happen by year-end.
"Last October, we announced a global channel strategy for Symantec that was also relevant for Veritas," he said. "A lot of what was put in place for Symantec is part of the channel strategy for Veritas."
NetBackup 7.7, which features strong support for cloud-based backups and replication of deduplicated data to the cloud, is a big enhancement to the Veritas line as the company prepares to split from Symantec, said Mike Spindler, data protection and storage practice director at Datalink, an Eden Prairie, Minn.-based solution provider and long-term Symantec and Veritas channel partner.
Veritas is still very much a power player in the data protection business, Spindler told CRN.
"Symantec got a lot of good momentum with its NetBackup all-in-one appliances," Spindler said. "The challenge for the company is that its scale wasn't big enough to unseat its key competitor, EMC's Data Domain. But the latest model, combined with the new functionality of NetBackup 7.7, gives Veritas equal footing with Data Domain and other competitors."
PUBLISHED JULY 8, 2015