Technology security company Symantec has reached a deal to acquire privately held cybersecurity firm Blue Coat for $4.65 billion.
The amount will be in cash by Symantec, with the board of both companies already having approved the acquisition. The deal is expected to be completed in the third quarter, with Blue Coat CEO Greg Clark to be appointed as the CEO of Symantec and to join the company's board.
With Symantec's acquisition of Blue Coat, the company will further enhance its market leader status in the cybersecurity industry. Symantec will be combining its threat telemetry systems with the networks and cloud security offerings of Blue Coat to provide various security solutions to hundreds of millions of servers and endpoints and billions of web transactions and email accounts.
"Together, we will be best positioned to address the ever-evolving threat landscape, the massive changes introduced by the shift to mobile and cloud, and the challenges created by regulatory and privacy concerns," said Symantec Chairman Dan Schulman.
The combined entity will have revenues of $4.4 billion for fiscal year 2016, with 62 percent of this amount coming from the enterprise security industry. Symantec, the creator of the Norton antivirus software, will be placed in a better position in the competition against rival companies in the industry such as Palo Alto Networks, Check Point Software Technologies and FireEye.
The transaction is expected to generate run-rate cost savings of $550 million by the end of fiscal year 2018, with $400 million to come from Symantec's cost efficiency program.
The program is a part of the transformation that Symantec has been undertaking over the previous year. It has sold Veritas, its data storage unit, in a $7.4 billion deal back in January to be able to collect the necessary cash to boost its core security software business.
Symantec will be focusing more on enterprise security, but CFO Thomas Seifert said that it has no plans to sell off its consumer security unit, as it is still a very profitable business for the company.
Blue Coat was nearing its filing for an IPO, with the company undertaking a dual track process of looking to sell while preparing to launch an IPO.
Seifert said that the $4.65 billion price that Symantec will pay to acquire the company is within the range of the value of a Blue Coat IPO, so Symantec believes that it will pay fair value for the deal.
The sale of Blue Coat is a quick turnaround for Bain Capital, which purchased the company for $2.4 billion last year.
Symantec, in its 2016 Internet Security Threat Report released in April, said that 2015 saw a jump in hacking numbers and smarter attacks.
