Report: Private equity firms want to buy Symantec for $16.4 billion

Symantec is fielding a $14.6 billion acquisition offer.

Last Friday, the Wall Street Journal reported that private equity firms Permira and Advent approached Symantec with a $16.4 billion acquisition offer. Notably, the two financial groups aren’t interested in interfering with Broadcom’s purchase of Symantec’s enterprise business. Instead, the two organizations want the deal to proceed because they are interested in the corporation’s consumer utility segment.

Symantec Purchase Details

According to the Wall Street Journal, Permira and Advent made an offer to buy Symantec for $26-$27 a share. As the software company is currently worth $14.5 billion, the acquisition proposal includes a 13 percent premium.

Furthermore, the newspaper said one key aspect of the transaction is unclear. Permira and Advent want to buy Symantec after the Broadcom transaction is complete. At least, they want to buy it and let the highly lucrative sale proceed. It’s worth noting that the two financial groups would benefit immensely from delaying their acquisition. If the firms make the deal too soon, they would likely have to pay taxes on the special dividend that Symantec plans to give its shareholders.

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The publication also notes that Permira and Advent’s current offer isn’t the first time they’ve tried to buy the cybersecurity corporation. The private equity firms reportedly vied with Broadcom to acquire the company earlier this summer.

Ultimately, the software company and its suitors couldn’t agree on a purchase price. In early August, Broadcom made arrangements to buy Symantec’s enterprise segment for $10.7 billion. Barring regulatory objections, Broadcom will complete its acquisition by the end of January 2020. As part of the agreement, the cybersecurity leader announced plans to distribute the payment to stakeholders via a special dividend.

As of this writing, Symantec has not confirmed the Wall Street Journal’s report. However, the software company’s stock price did rise by 5.5 percent after the article was published.

Ripe for the Plucking

Though Symantec is one of the cybersecurity sector’s leading corporations, it’s in a vulnerable position at the moment.

As noted by Market Realist, the firm’s profit generation has been weak for quite some time. Symantec forecasted fiscal Q2 2020 earnings of between $1.155 billion-$1.205 billion on revenues of $.40-$.44 per share. As such, the company predicts that its income will remain roughly equal to that of the same time last year.

Symantec’s only saving grace is the sale of its enterprise segment to Broadcom, which will generate $8.5 billion in post-tax revenue.

Furthermore, Symantec’s current CEO Richard Hill announced plans to depart the company once it’s deal with Broadcom is complete. Hill assumed the position on an interim basis in May following the abrupt departure of his predecessor Greg Clark. At that time, Symantec struggled with an internal auditing probe, an activist investor revolt, and a 32 percent decline in year-on-year market value.

As Symantec currently lacks both growth and leadership, Permira and Advent picked an excellent time to go after the cybersecurity giant. If the two firms reduce the corporation’s headcount and prioritize the development of its Norton antivirus and LifeLock subsidiaries, they could turn the company around. Though the corporation has been damaged by financial underperformance and inconsistent leadership, it still has a very recognizable and valuable brand.

With the correct strategic moves, Symantec could reclaim its place at the top of its industry.