Symantec buys Veritas in $13.5bn deal

In a long-rumoured move, security software maker Symantec said today it will buy storage specialist Veritas Software in a deal worth roughly $13.5bn.

The combined company will form a powerhouse in security, systems and storage management software with roughly $5bn a year in revenue.

The company will operate under the Symantec name, with John W. Thompson, Symantec's chief executive, serving as chairman and CEO. Gary L. Bloom, Veritas' chief executive, will become vice chairman and president.

Thompson said in a statement: "The new Symantec will help customers balance the need to both secure their information and make it available, thus ensuring its integrity."

The deal is the latest sign of consolidation in the enterprise software market and the second major acquisition this week. On Monday, PeopleSoft agreed to be acquired by Oracle after an 18-month battle.

Analysts expect more consolidation as companies try to increase their range of products to better compete for tight IT budgets. That pressure is prompting midsized companies and the industry's largest players to consider combinations to reach the broadest swath of the market.

For instance, Symantec, the leading security software maker, sells its products to both businesses and consumers, while Veritas serves midsized and large companies with its storage management systems. The companies are also banking on the desire of large companies to consolidate the number of vendors that they do business with.

"Customers are looking to reduce the complexity and cost of managing their IT infrastructure and drive efficiency with fewer suppliers," Thompson said.

The board of directors of the combined company will include six members of Symantec's current board and four from Veritas' current board for a total of 10 members, the companies said.

Symantec will pay $30.78 a share in the deal, which represents a premium of 9.5 per cent over Veritas' closing price on Wednesday of $28.11 on the Nasdaq.

Under the deal, which has been approved by both boards of directors, Veritas stock will be converted into Symantec stock at a fixed exchange ratio of 1.1242 shares of Symantec common stock for each outstanding share of Veritas common stock, the companies said. Upon closing, Symantec shareholders will own approximately 60 per cent and Veritas shareholders approximately 40 per cent of the combined company.

Mike Ricciuti writes for CNET News.com