16th Mar 2022 15:49
(Alliance News) - Shares in cybersecurity firms Avast PLC and NortonLifeLock Inc tumbled on Wednesday after a tie-up between the two was placed under threat by a UK watchdog.
Norton, which agreed back in August to buy Prague-based Avast, was trading 12% lower at USD26.55 in early dealings in New York. Avast was down 13% at 561.60 pence each roughly an hour before the closing bell in London.
Norton's cash-and-shares deal to acquire Avast had valued the FTSE 100 stock at USD8.6 billion, when the acquisition was announced back in August.
UK antitrust clearance was the only remaining regulatory condition for the deal, which had been expected to close on April 4.
The duo have five days to address concerns outlined by the UK Competition & Markets Authority.
At the start of 2022, the CMA announced it launched an inquiry into Avast's takeover by Norton, to investigate if the potential merger would reduce competition in the UK. It had until Wednesday to make a phase 1 decision.
The CMA said: "It is or may be the case that this merger has resulted or may be expected to result in a substantial lessening of competition within a market or markets in the UK."
According to the watchdog, the duo are close competitors, in a field which lacks several other rivals.
Due to the impasse, the two companies said they now expect the acquisition to complete in "mid-to-late 2022".
Interactive Investor analyst Victoria Scholar commented: "Given the backdrop of tensions between Russia and Ukraine and fears of cyber warfare, cyber security products are more important than ever, potentially contributing to this aggressive response from the CMA, which both sides will be keen to respond to in a way that will breathe life back into the deal."
By Eric Cunha; [email protected]
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