Avast shares climb 18% as cyber security firm confirms it is in acquisition talks with a US rival
Shares of Avast soared by about a fifth after confirmation that it was in acquisition talks with a US rival.
The FTSE 100 cybersecurity group said it was locked in ‘advanced’ discussions with Norton LifeLock, owner of Norton Antivirus Software, which is considering making an offer to the firm.
Avast is just the latest London-listed company to be targeted as the pandemic hit as predators – especially private equity groups – surround the UK market hunt for bargains.
Share Up: Cyber-security firm Avast said it was locked in ‘advanced’ discussions with Norton LifeLock, owner of Norton Antivirus software, which is considering making an offer for the firm.
AA, Agreco and even Butlin’s owner have all been taken private – and firms such as Morrison and St. Modvain Properties have attracted bids over the past few weeks.
The acquisition by Nasdaq-listed Norton will also strip London of another heavyweight technology company, following Arm’s sale to Japan’s SoftBank in 2016 and Imagination Technologies to China’s Canyon Bridge last year.
Shares of Avast rose 18.1 percent, or 91.4p, to 595.6p yesterday – raising its share market value to £6.1 billion.
Analysts at Berenberg said Avast could be worth as much as £8.4 billion.
Co-founders Eduard Kucera and Pavel Boudice hold a 37.5 per cent stake – whose value rose from £1.95 billion on Wednesday to £2.3 billion last night.
In contrast, shares of Arizona-based Norton fell nearly 5 percent yesterday.
Avast is a Czech company based in Prague, but it rejected the Nasdaq listing in 2018 in favor of London.
It provides antivirus and ransomware protection to individuals and businesses with approximately 435m customers and 1,700 employees worldwide.
Many of its basic products are free. The firm claims it prevents over 4m ransomware attacks – in which criminals hack a system and then ask for payment to unlock it again – and 1.5bn malware attacks every month.
Norton has not made a formal offer and will have until August 11 to pursue the proposal if it so desires.
In a statement, the American conglomerate said a merger would bring together “a coalitional vision, highly complementary business profiles and a joint commitment to innovation.”
Any proposal would still require the approval of shareholders and competition regulators.
Analysts at Peel Hunt said that, while they believe Avast is ‘structurally challenging’, a deal would be ‘positive for Avast shareholders’.
But Danny Hewson, financial analyst at AJ Bell, said: ‘While news of the bid will generate excitement in the short term, Britain’s already very modestly sized technology sector could risk losing one of its key components.
‘This reveals the broader truth that the current surge in acquisition activity could have a materially negative impact on the depth, breadth and diversity of the UK stock market.’