Norton LifeLock and Avast to merge to lead Consumer Cyber Safety Business

The negotiations between NortonLifelock and Avast that The Register reported had reached an advanced stage in July have proved productive, to the tune of more than $8 billion. The deal has been shaped as a merger, it will see NortonLifelock obtain all Avast shares and result in the mutual companies listing on NASDAQ, rather than Avast's current London Stock Exchange home.

The companies' canned statement says their respective boards "believe that the merger has a compelling strategic and financial rationale and represents an attractive opportunity to create a new, industry-leading consumer Cyber Safety business".

Investors said the merger will "enhance the financial profile of the combined company through increased scale, long-term growth, cost synergies with reinvestment capacity and strong cash flow generation supported by a resilient balance sheet". Double-digit earnings per share accretion has been forecast for the first full year following completion of the merger, as has "double-digit revenue growth in the long-term".

Everything may or may not come to pass. As described by Avast, a shorter-term incentive is that the deal represents a 20.7 per cent premium over its share price.

Ondřej Vlček, Avast's CEO is likely to join Norton LifeLock as President and join its board. Pavel Baudiš, current director and a co-founder of Avast, may probably become an independent director of Norton LifeLock. The mutual companies will have quarterly revenue of approximately $900 million, based on each outfit's most recent reporting.

The consumer and small business security market is difficult by the presence of Windows Defender in every copy of Windows, at no extra cost, as it avoids the need for dedicated security software. NortonLifeLock is the top player and Avast is the second-placed player and will emerge with about 25 per cent of the market. Investors seem to like that idea: NortonLifeLock shares jumped almost five per cent after NASDAQ closed.