15th Jul 2021 08:50
(Alliance News) - NortonLifeLock Inc and Avast PLC on Thursday confirmed they are in advanced talks regarding a possible combination.
A deal may be in the form of a cash and share takeover offer by Norton for Avast, the two companies said. Possible terms were not disclosed.
Avast shares jumped 12% to 566.60 pence in London on Thursday morning, giving it a market capitalisation of around GBP5.88 billion.
The talks were reported late on Wednesday by the Wall Street Journal, which said a deal could value Avast at around USD8 billion, assuming a typical premium to its market capitalisation.
Tempe, Arizona-based Norton makes consumer cybersecurity software, as does Avast, which is based in Prague.
Under UK takeover rules, Norton will have to make a firm offer by August 11, or announce it will not make an offer.
"A combination of NortonLifeLock and Avast would bring together two companies with aligned visions, highly complementary business profiles and a joint commitment to innovation that helps protect and empower people to live their digital lives safely," Norton said.
Liberum analysts including Oyvind Bjerke said the merger makes sense with increasing competition in the industry, and that the companies can combine their unique products into a stronger offering.
They added that a deal would be a big positive for Avast shareholders, as they see the company as "structurally challenged and therefore overvalued."
NortonLifeLock shares fell 2.3% to USD26.29 in after-hours trading in New York, following the WSJ story.
By Ivan Edwards; [email protected]
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