Symantec agreed to acquire Blue Coat for approximately $4.65 billion in cash. Symantec intends to finance the transaction with cash on the balance sheet and $2.8 billion of new debt. In connection with the transaction, Silver Lake has agreed to make an additional investment of $500 million in 2.0% convertible notes due 2021 of Symantec, doubling its investment in Symantec to $1 billion. In addition, Bain Capital has agreed to make an investment of $750 million in the convertible notes.
Symantec said the acquisition of Blue Coat enhances its position to define the future of cybersecurity and set the pace for innovation.
“With this transaction, we will have the scale, portfolio and resources necessary to usher in a new era of innovation designed to help protect large customers and individual consumers against insider threats and sophisticated cybercriminals. Together, we will be best positioned to address the ever-evolving threat landscape, the massive changes introduced by the shift to mobile and cloud, and the challenges created by regulatory and privacy concerns,” said Dan Schulman, Chairman of Symantec.
For its fiscal year ending April 30, 2016, Blue Coat reports GAAP revenue of $598 million and non-GAAP revenue was $755 million, with 17% year-over-year growth, supported by new products and new customers. For the same time period, the company had non-GAAP operating margins of 22% and cash flow from operations of $135 million. Also for this time period, GAAP operating margins were -42%.
The combined Symantec + Blue Coat would have had $4.4 billion in revenues in fiscal year 2016, of which 62% would come from enterprise security. By the end of fiscal 2018, Symantec expects to realize $550 million in run-rate cost savings, of which $400 million will come from Symantec’s previously announced cost efficiency program.
Greg Clark, CEO of Blue Coat, will be appointed Chief Executive Officer of Symantec and join the Symantec Board upon closing of the transaction. The Board of Directors will continue to be led by Symantec’s current Chairman, Mr. Schulman. Mr. Clark will serve as CEO and Mr. Seifert will continue as Chief Financial Officer.