NortonLifeLock, Avast Merger Faces UK Probe

NortonLifeLock (formerly Symantec) merger with London-listed Avast under threat after UK’s CMA signals deeper investigation

The UK’s competition watchdog, the Competition and Markets Authority (CMA), has stepped into the merger between two cyber security firms.

Last August NortonLifeLock (formerly known as Symantec) announced it would merge with security rival Avast.

The ‘merger’ will see NortonLifeLock pay between $ 8.1bn and $ 8.6bn for the entire ordinary share capital of Avast.

CMA investigation

But now the CMA has announced that “NortonLifeLock’s approximately £ 6bn purchase of Avast raises competition concerns and may now be referred to for an in-depth investigation.

The CMA pointed out that both parties offer a number of cybersecurity products including antivirus software (ie endpoint security software), privacy software (ie VPNs) and identity protection software.

The CMA said that as the companies are close competitors, with few other significant rivals, it is concerned that if completed the proposed deal could lead to a reduction in competition in the UK market.

This could lead to UK consumers getting a worse deal when looking for cyber security software in the future, the CMA believes.

“We are living more of our lives online and it is vital that people have access to competitive cyber security software when seeking to protect themselves and their families,” said David Stewart, CMA executive director.

“NortonLifeLock’s proposed purchase of Avast could lead to a reduction in competition in the UK and ultimately a worse deal for consumers when looking for cyber security software,” said Stewart.

“Unless the companies can offer a clear-cut solution to address our concerns, we intend to carry out an in-depth phase 2 investigation,” Stewart concluded.

NortonLifeLock and London-listed Avast now have 5 working days to submit proposals to address the CMA’s competition concerns.

The CMA then has a further 5 working days to consider whether to accept any offer instead of referring the case for an in-depth phase 2 investigation.

Company response

NortonLifeLock told Reuters on Wednesday it did not plan to propose any ‘Phase 1’ remedies, calling the CMA’s decision “surprising.”

Avast meanwhile said it remained of the view that the deal “will only benefit consumers in the UK.”

NortonLifeLock said the investigation would delay the completion of the deal, which is now expected to close in mid-to-late 2022 and not April 4 as expected.

The deal was initially expected to close last month, but the Arizona-based company was awaiting regulatory nods from the United Kingdom and Spain.

It has already gained approval from Spain, Reuters reported.

NortonLifeLock – Symantec

There is quite an involved back story to both NortonLifeLock and Avast.

Symantec as a reminder, decided back in October 2014 to split into two independent publicly traded companies by the end of 2015.

Symantec was focused on security, whereas Veritas Technologies (which Symantec had acquired in 2005 for $ 13.5bn,) focused on storage and information management.

Then in January 2016 Symantec sold Veritas to private equity firm The Carlyle Group for $ 7.4bn.

The next twist in the life of Symantec came in August 2019 when Broadcom acquired the Enterprise Security software division of Symantec for $ 10.7 billion, after it failed to purchase the entire company.

Broadcom opted not to hold onto that part of Symantec for long, and in January 2020 IT services giant Accenture acquired Symantec’s Cyber ​​Security Services business from Broadcom, for an undisclosed amount.

Soon after that the company adopted the NortonLifeLock name and relocated its headquarters to Tempe, Arizona from Mountain View, California.

Avast on the other hand had purchased its rival AVG back in 2016 for $ 1.3bn, and in 2015 it had created Jumpshot to analyze consumers’ online habits by measuring their search, click and buy patterns across thousands of categories from over 150 websites.

In January 2020, Avast announced plans to terminate its data provision to its subsidiary Jumpshot, and to begin a wind down of the unit, after allegations that the Avast and AVG browser extensions had spied on the web surfing habits of users.

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