10 Things Partners Can Expect From Symantec's Acquisition Of Blue Coat

Symantec On The Acquisition Track

Symantec's announcement last week of its intent to acquire Blue Coat Systems upheld a promise the company made earlier this year to invest in acquisitions to expand, among other things, its threat protection portfolio. The acquisition was a blockbuster, costing Symantec $4.65 billion and adding a full portfolio of cloud and web security solutions. CRN sat down with Blue Coat COO and President Michael Fey and Symantec Global Vice President of Partner and Channel Sales John Thompson to talk about what the move means for partners and what solution providers can expect as the companies work to integrate their extensive portfolios. Take a look at what they had to say.

Expanded Technology Portfolio

The deal vastly expands the Symantec portfolio into the areas of cloud and web security, where Blue Coat was a leading player, Fey said. Symantec will get to leverage the Blue Coat cloud security portfolio, sandboxing and full-capture packet and analytics, he said. That breadth of portfolio will help the combined company "define the future of cybersecurity," Fey said. For its part, Blue Coat will extend its reach with capabilities around DLP, cloud sandboxing, a huge user base, managed services, additional advanced threat protection (ATP) capabilities and a vastly expanded threat intelligence network, he said.

New Symantec CEO

As part of the acquisition, Symantec landed a successor for outgoing CEO Michael Brown, who announced in April that he would be stepping down as soon as a replacement was found. Blue Coat CEO Greg Clark (pictured) will be stepping into the top role at Symantec as soon as the acquisition closes, the company said. Fey and Thompson both said Clark's long history in the security industry, plus his background working with software companies and channel-friendly nature, will be a good fit to take Symantec forward. Clark has been CEO of Blue Coat since 2011, his most recent position in a long career in software and security company leadership roles. Since taking that job, he helped lead the Sunnyvale, Calif.-based company through a period of turnaround, which included taking it private through a private equity acquisition and more recently making multiple key acquisitions to plant its stake in the cloud security market.

Changing The Competitive Dynamic

The combined companies will be a much more competitive force in the market, Fey said. By bringing the two companies together under the same roof, Fey said Symantec will be able to offer a full range of security solutions, with very little overlap in their existing portfolios, as well as offer solutions that are "for cloud, from cloud and to cloud."

"We think that we will be more meaningful to our customer base and more valuable in our defense postures. We think we're going to be more meaningful to partners by being a much larger chunk of their business and wallet," Fey said. Partners agreed. Steve Barone, president and CEO of Ferndale, Mich.-based CBI, for one, said the acquisition "tells a much better story" and "puts gas in the arsenal when going to battle" against companies like FireEye and Palo Alto Networks.

Will Operate Independently Until Close

The two companies will operate independently until the close of the acquisition, which is expected in the third calendar quarter of 2016. However, Fey said the companies plan to operate as one in the long term. The combined company is expected to have $4.4 billion in revenues in fiscal 2016, it said, the majority of which (62 percent) would come from its enterprise security business.

Focus On Partners In New Company

Thompson said the "partner opportunity is strong" for the combination of Blue Coat and Symantec. That's true for distribution, resellers, VARs and managed service providers, That opportunity will be driven from the top of the organization, Fey said, calling new CEO Clark a "channel-friendly CEO" who recognizes the value a strong channel can bring to the business. he said. In particular, Thompson said the newly expanded portfolio, with little overlap, will open the door for a broader set of solutions and new cross-sell opportunities.

"We were already twice our nearest competitor in terms of revenue in the partner community. This will make that number even larger," Thompson said. "It's a formidable opportunity for partners."

Single Partner Program

After the acquisition closes later this year, Thompson said Blue Coat and Symantec plan to form a common partner program. In the meantime, their separate programs will continue to operate independently, though some partners CRN spoke with said they're already starting to engage with both companies if they weren't already. The program will bring together the extensive portfolios of the two companies, Thompson said, with technologies around endpoint, email, web, network and server security. He said feedback from partners has been positive about the announced acquisition and he hopes to leverage the best pieces of both programs.

"We think it will accelerate growth for both companies," Thompson said.

Expanded R&D Capabilities

After the acquisition closes, a combined Symantec-Blue Coat will have over 3,000 engineers and researchers focused on R&D and threat research, the company said. Thompson said the combined engineering capabilities will be key to developing new products, as well as integrating the portfolios of the two companies.

Keep Most Employees

Fey said the two companies plan to try and retain as much of the company's talent as possible in the merger.

"Cybersecurity talent is very hard to come by," Fey said. "There is a battle for talent. It's our hope and goal that we keep the bulk of the talent on both sides who want to join us."

The comments come despite increased cost savings anticipated by the merger. Symantec said it expects to see additional cost savings of $150 million, adding to the $400 million it already hopes to cut in the next two years. Of that $400 million, $100 million is expected to come from "organizational improvements," a number that includes around 1,200 layoffs.

Guidance From Increased Investors

As part of the acquisition news, Symantec announced that current strategic investor Silver Lake would double down on its investment, increasing it to $1 billion, while Bain Capital, the majority stakeholder in Blue Coat, would invest $750 million in the combined company. Thompson said the investments indicate a "strong future" for Symantec and he expects the investors will help the company accelerate its adjustments and provide guidance going forward.

Acquisition Closing

All these changes are pending the closing of the acquisition, which is expected to take place in the third calendar quarter of 2016, the company said. The closing is subject to customary closing conditions and regulatory approvals, the company said. Upon the closing, Fey said Symantec and Blue Coat together will leverage its weight in the industry to "define the future of cyber security."