Leading security software company Avast Software has today announced its decision to acquire its Dutch-rival AVG Technologies N.V in an all-cash deal. It has agreed to pay $25.00 per share in cash to purchase all of the outstanding ordinary shares of AVG, amounting to a total of approximately $1.3 billion.
Both security companies’ that were initially setup in Czech Republic in the early 1980’s, have since then expanded their operations internationally. However, this transaction gives them a chance to pool their resources and build the biggest cyber-security conglomerate in the world.
As mentioned in the official statement, Avast is pursuing this acquisition to,
gain scale, technological depth and geographical breadth so that the new organization can be in a position to take advantage of emerging growth opportunities in Internet Security as well as organizational efficiencies.
It believes that the technological know-how and geographical reach of each company when combined will help Avast serve customers with more advanced security offerings. It will also them expand their core business and explore new innovations, such as security for IoT devices in emerging markets.
The agreement once complete, will result in a humongous network of more than 400 million endpoints(or users), of which 160 million are active on mobile. Avast says it currently protects 230 million people and businesses with its applications.
This rivalry turned partnership will enable the former to create more technically advanced personal security and privacy products, to neutralize new threats as soon as they appear.
Commenting on the new beginning, Vince Steckler, CEO of Avast Software adds that,
We are in a rapidly changing industry, and this acquisition gives us the breadth and technological depth to be the security provider of choice for our current and future customers . Combining the strengths of two great tech companies, both founded in the Czech Republic and with a common culture and mission, will put us in a great position to take advantage of the new opportunities ahead.
The Transaction
The agreement has been unanimously approved by the Management Board and Supervisory Board of both Avast and AVG. But, the latter is now pushing the offer to its shareholders for acceptance and expects it to close sometime between September and October 2016.
As also mentioned above, Avast has agreed to purchase all outstanding ordinary shares of AVG at a price of $25.00 per share in cash. Yeah, all cash. The company is paying about a 33 percent premium, when compared to the average price per share over the last six months.
The company is planning to fund the transaction using a mix of cash balances on hand and committed debt financing from third party lenders. Jefferies International Limited and Morgan Stanley & Co. LLC are respectively acting as financial advisors for Avast and AVG.
If everything goes fine, Avast will become the biggest security company to exist on this planet. And maybe it will give the company enough stability to pursue its reported IPO which was canceled in 2012, due to poor market conditions.
