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Symantec sells Veritas for 8 billion

Article By: ,  Financial Analyst
August 11, 2015 4:36 PM

Symantec today (August 11th) announced plans to sell its data storage business Veritas to a group including The Carlyle Group and Singapore's sovereign wealth fund for $8 billion (£5.1 billion) in cash. The deal is expected to close by January 1st, 2016.

The Norton antivirus maker said it expected to receive about $6.3 billion in net cash proceeds from the transaction. It had been planning to separate its security software business from Veritas for months and announced a tax-free spinoff last October.

The separation into two distinct entities could lead to acquisitions, given that large companies including EMC Corp and Hewlett-Packard Co are interested in the stand-alone security business or in an independent storage business.

Weak sales

The company has seen revenue growth turn negative in recent months mainly due to slowing PC sales, along with sluggish demand for storage and data management software. 

While security providers have mainly benefited from demand for technologies to prevent attacks, Symantec has remained behind its competitors. The security giant is to announce its fiscal first quarter 2016 earnings later today, and most analysts are expecting a weak financial performance for the three months ending in June.

Market watcher Technology Business Research (TBR) is forecasting the company’s year-on-year revenue to decline by around 12 per cent, after a 6.6 per cent year-on-year drop the previous quarter.

This is latest company to split after a series of Silicon Valley technology companies broke into smaller pieces in recent months.

Hewlett-Packard announced last year that it would be transforming its better-performing computer and printer business and its corporate hardware and services operations into two different entities. 

Online auction site eBay also revealed it will split from its payments system PayPal into a separate company in the second half of 2015.

Symantec shares traded seven per cent higher at $24.57 today in premarket trading in New York following the report.

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