(Bloomberg) — Avast Plc soared to a record high after the UK waved through its takeover by NortonLifeLock Inc., closing an in-depth probe that had cast doubt on the viability of the deal.
The Competition and Markets Authority removed the final obstacle for the $8.6 billion takeover, saying in a statement Wednesday that it won’t harm competition in the cybersecurity market. It had referred the deal for an in-depth probe in March and set a Sept. 8 deadline for a final decision to be made.
Avast shares jumped as much as 43% in London trading, the most on record. The CMA’s decision, which came a month earlier than expected, took the market by surprise — particularly as the UK competition authority’s tone had previously cast doubt on whether the proposed merger would go through.
“The decision could have gone either way. The CMA has been blocking so many mergers recently, but has decided this is one to wave through in the end,” said Tom Smith, an antitrust lawyer at law firm Geradin Partners.
The CMA has provisionally found that a combined NortonLifeLock and Avast would still face “significant competition” from their main rival McAfee and a range of suppliers with a smaller market position in the UK. The agency also pointed to the increasingly important alternatives offered to consumers by Microsoft Corp.’s security applications.
“Yesterday, we were almost in the position of a deal-break as a CMA statement last week was not really clear on how the talks were going,” said Gregory Lafitte, an analyst at Tradition. “We expected to get an update and to see potential remedies at the end of August, but surprisingly today the headline has been totally positive and without any doubt.”
The merger comes as high-profile ransomware attacks on large companies and infrastructure have increased demand for software guards against hackers. Arizona-based NortonLifeLock is buying Avast in a deal valued between $8.1 billion and $8.6 billion in August 2021.
The transaction will dramatically expand user numbers for NortonLifeLock, which was known as Symantec Corp. before selling its enterprise-security business to Broadcom Inc. in 2019 for $10.7 billion. Prague-based Avast attracts millions of customers to a free, baseline product and tries to turn them into paying users with more advanced software.
“We welcome the CMA’s provisional findings this morning, which we see as a long-overdue reflection of the underlying realties of the cybersecurity software landscape,” said Josh Rosen, analyst at United First Partners.
(Updates with more details throughout, adds analyst quote in fourth paragraph.)
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