Symantec To Acquire Veritas For $13.5B

Symantec Corp., the largest maker of antivirus software, has pulled off a blockbuster deal that will catapult it and data-management and storage vendor Veritas Software Corp. into an estimated $5 billion-a-year company that reaches from desktop PCs to company data centers. The $13.5 billion all-stock acquisition, revealed late last week, could give Symantec the breadth it needs to take on the top systems and data-management vendors, including IBM and Computer Associates.

The deal is seen as part of Symantec chairman and CEO John W. Thompson's long-held strategy to evolve Symantec from a provider of consumer antivirus and utility tools into one of the world's leading business-security software providers. The Veritas buyout caps a string of other deals that began in 2000 and is ranked as one of the largest software company acquisitions.

It combines Symantec's IT security products with Veritas' data-storage software. "We see customers asking us for simpler solutions from fewer vendors. And the convergence of storage and security is a fairly obvious transaction," says John Schwarz, Symantec's president and chief operating officer.

Approximately three-quarters of the combined company's business will come from business customers and one-quarter from consumers. Thompson will continue to hold the top post in the combined company, while Veritas chairman and CEO Gary Bloom will become vice chairman and president.

Vince Stephens, manager of network engineering for online real-estate site Homestore.com, says he's in favor of having fewer security vendors to manage. "Generally, consolidation is good."

This isn't Symantec's first acquisition aimed at data management. In 2003, it acquired PowerQuest Corp., a maker of hard-drive management and data-backup software. Symantec has also been shoring up its security portfolio. In 2002, it acquired at least four security vendors. This month, it bought Platform Logic to strengthen its host-based intrusion prevention, and recently acquired application security consulting firm @stake and anti-spam vendors TurnTide and Brightmail.

Analysts say Symantec wants to be a CIO's one-stop provider of security and data-management software. "They're starting to position against IBM, Computer Associates, Hewlett-Packard, and BMC Software," says Pete Lindstrom, an analyst at research firm Spire Security.

Symantec also is preparing for increased competition from Microsoft; the fight has been heating up since Microsoft's 2003 acquisitions of antivirus software maker GeCad and desktop security maker Pelican Software. "Microsoft getting into the antivirus market would seriously impact Symantec's consumer-driven revenues," says John Pescatore, an analyst at research firm Gartner. Last week, Microsoft acquired Giant Company Soft- ware Inc. for an undisclosed sum to build anti-spyware capabilities into Windows.

Some are skeptical about Symantec's ability to pull off this latest deal. Pescatore says several recent Symantec acquisitions have reaped less-than-spectacular results. "Symantec has an about average track record of making these acquisitions work. They're not Cisco," he says.

Security managers also have their doubts. "When you have good point solutions and they get acquired by a larger organization, it often can stifle innovation," says Chris Hoff, chief information security officer and director of enterprise security services for financial-services cooperative Western Corporate Federal Credit Union. "The products get lost in the large company's grand vision."