Deal is the latest sign of consolidation in the enterprise software market and the second major acquisition this week.
Staff Writer, CNET News.com
In a long-rumored move, security software maker Symantec said Thursday that it will buy storage specialist Veritas Software in a deal worth roughly $13.5 billion.
The combined company will form a powerhouse in security, systems and storage management software with about $5 billion a year in revenue.
The company will operate under the Symantec name, with John Thompson, Symantec's chief executive, serving as chairman and CEO. Gary Bloom, Veritas' chief executive, will become vice chairman and president.
"The new Symantec will help customers balance the need to both secure their information and make it available, thus ensuring its integrity,” Thompson said in a statement.
The deal is the latest sign of consolidation in the enterprise software market and the second major acquisition this week. On Monday, PeopleSoft agreed to be acquired by Oracle after an 18-month battle in a deal worth roughy $10 billion.
Analysts expect more consolidation as companies try to increase their range of products to better compete for tight IT budgets. That pressure is prompting midsize compaies and the industry's largest players to consider combinations to reach the broadest swath of the market.
For instance, Symantec, the leading security software maker, sells its Norton line of products to both businesses and consumers, while Veritas serves midsize and large companies with its storage management systems. The companies are also banking on the desire of large companies to consolidate the number of vendors that they do business with.
"Customers are looking to reduce the complexity and cost of managing their IT infrastructure and drive efficiency with fewer suppliers," Thompson said.
Analysts said the deal is all about market clout. "This acquisition...is about remaining competitive in a consolidating market filled with giants like Cisco, Hewlett-Packard, IBM and Sun," according to a report issued this week by Forrester Research.
"There is no overlap between (Symantec and Veritas)—-the companies' product portfolios are vaguely complementary--but don't expect any radical new technology combinations because there are few, if any," Forrester said.
Still, the combined company's products will likely find a warm reception among technology buyers. Storage and security are top spending priorities for big business, despite a continuing trend toward cutting IT expenses, according to a recent survey of roughly 1,400 information technology buyers by Forrester.
The board of directors of the combined company will include six members of Symantec's current board and four from Veritas' current board for a total of 10 members, the companies said. The combined company will employ more than 12,000 people.
Symantec will pay $30.78 a share in the deal, which represents a premium of 9.5 percent over Veritas' closing price Wednesday of $28.11 on the Nasdaq.
Under the deal, which has been approved by both boards of directors, Veritas stock will be converted into Symantec stock at a fixed exchange ratio of 1.1242 shares of Symantec common stock for each outstanding share of Veritas common stock, the companies said. Upon closing, Symantec shareholders will own approximately 60 percent and Veritas shareholders approximately 40 percent of the combined company.
The deal is subject to regulatory approval.