Symantec Corp. has entered into a definitive agreement to sell its Enterprise Security assets, which include the Symantec name, to Broadcom Inc., for US$ 10.7 billion in cash. The transaction, which was approved by Symantec’s Board of Directors, is expected to close before the end of the calendar year pending regulatory approvals.
“Symantec has a long history of offering unparalleled cyber technology,” said Daniel H. Schulman, Chairman of the Symantec Board of Directors. “It is a testament to our market leadership and dedication to the mission of making the world a safer place, that Broadcom has chosen Symantec’s Enterprise Security assets to expand their reach into cyber security. By unlocking value from Enterprise Security, we are significantly advancing our ongoing transformation strategy and positioning our consumer cyber safety business, Norton LifeLock, for success.”
“This is a transformative transaction that should maximize immediate value to our shareholders while maintaining ownership in a pure play consumer cyber safety business with predictability, growth and strong consistent profitability. In addition it allows the Enterprise Security business to grow and compete on an enterprise platform with a worldwide sales and distribution reach which can service our existing customers,” said Rick Hill, Interim President and CEO. He added, “It also allows our Norton LifeLock business, a world recognized leader in consumer and small business cyber safety to operate independently and give investors a clear understanding of the growth opportunity and strong financial performance.”
Prior to closing the company will continue to manage the Enterprise Security business, while working with Broadcom to plan for a smooth transition. At close, Broadcom will assume the Enterprise Security assets, including the Symantec name as part of their broad infrastructure software portfolio. Afterwards the company will continue to operate their Consumer Cyber Safety business. A company name was not announced.
“With a large and growing market, Norton LifeLock products address consumers’ increasing need for cyber safety,” continued Mr. Hill. “In the first quarter of fiscal year 2020, our Consumer Cyber Safety segment contributed 90% of Symantec’s total company operating income. It is our view that with an operating model focused on increased marketing investments and product development for consumer privacy, we can simultaneously grow our subscriber base and increase our annual revenue per user. We expect this asset divestiture will enable our Norton LifeLock business to grow revenue in the mid-single digits, with continued strong cash flow from operations and expanded earnings growth. It has been my honor to work with employees from every area of the Company. I can honestly say there are no more capable and driven people than these executives, managers, and employees. As we work toward closing this transaction with Broadcom, we remain committed to protecting our customers and continuing to focus on operational excellence.”
“This $10.7 billion agreement to sell our Enterprise Security assets to Broadcom delivers significant value to Symantec shareholders,” said Vincent Pilette, Executive Vice President and CFO. “In addition, we have identified approximately $1.5 billion of annual run rate expenses which we plan to eliminate over the next 12 months at a cash cost of approximately $1 billion. We believe these cash costs will be materially offset by the sale of underutilized assets such as real estate. We are focused on disciplined execution, developing a cost structure that allows us to fuel growth and continue innovation in our consumer business.”
The Board of Directors is conducting a search for a permanent CEO for the consumer business. The Board has engaged with a leading executive search firm and is considering both internal and external candidates.