Symantec and Blue Coat, Inc. today announced that they have entered into a definitive agreement under which Symantec will acquire Blue Coat for approximately $4.651 billion in cash.
The transaction has been approved by the Boards of Directors of both companies and is expected to close in the third calendar quarter of 2016, said Symantec. Under the arrangement, Greg Clark, Chief Executive Officer of Blue Coat, will be appointed Chief Executive Officer of Symantec and will join the Symantec Board upon closing of the transaction.
With the acquisition of Blue Coat, Symantec aims to enhance its cybersecurity posture and “set the pace for innovation industrywide.”
On a pro-forma, non-GAAP basis, the combined company would have had $4.4 billion in revenues in fiscal year 2016, of which 62% would come from enterprise security. By the end of fiscal 2018, Symantec expects to realize $550 million in run-rate cost savings, of which $400 million will come from Symantec’s previously announced cost efficiency program, said Symnatec.
The Board of Directors will continue to be led by Symantec’s current Chairman, Mr. Schulman. Mr. Clark will serve as CEO and Mr. Seifert will continue as Chief Financial Officer.
Members of Blue Coat’s management team have not only agreed to join Symantec but also made the decision to rollover a substantial portion of their cash and options into the combined entity.
In connection with the transaction, Silver Lake has agreed to make an additional investment of $500 million in 2.0% convertible notes due 2021 of Symantec, doubling its investment in Symantec to $1 billion. In addition, Bain Capital has agreed to make an investment of $750 million in the convertible notes. The convertible notes are noncallable and unsecured, and have an initial conversion price of approximately $20.41 per share.
In connection with this investment, David Humphrey, a Managing Director of Bain Capital Private Equity, will be appointed to Symantec’s Board of Directors, effective at the close of the transaction.
Symantec intends to finance the transaction with cash on the balance sheet and $2.8 billion of new debt. The company is focused on paying down a significant portion of this debt within the next several years with cash on the balance sheet and through cash generation.
The transaction, which is expected to be completed in the third calendar quarter of 2016, is subject to the satisfaction of customary closing conditions, including applicable regulatory approvals.
Blue Coat, Inc. is a provider of advanced web security solutions for global enterprises and governments, protecting 15,000 organizations including over 70 percent of the Fortune Global 500.