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Why Symantec Shares Popped Today

By Evan Niu, CFA – Nov 6, 2018 at 3:28PM

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The maker of Norton antivirus security software may get acquired by a private equity firm.

What happened

Shares of cybersecurity company Symantic (NLOK -0.24%) have popped today, up by 13% as of 2:45 p.m. EST, after the company was reportedly approached with a buyout offer. Private equity firm Thoma Bravo is the rumored suitor.

So what

Reuters reported this morning that Thoma Bravo is looking to scoop up Symantec in what would be the largest leveraged buyout (LBO) of 2018. Symantec, which makes the popular Norton antivirus security software, has been growing its enterprise business after acquiring Blue Coat in 2016. The company has also been plagued by an accounting scandal in recent months, which has shaken investor confidence. Better-than-expected earnings results released earlier this month helped boost shares, though.

Person writing "Private Equity"

Image source: Getty Images.

Now what

Private equity firms have been particularly active in the cybersecurity space in recent years. Thoma Bravo had previously acquired Blue Coat for $1.3 billion in 2012 before selling it to Bain Capital for $2.4 billion in 2015. Symantec paid $4.65 billion for Blue Coat in 2016. Thoma Bravo said it would acquire Imperva just last month for $2.2 billion in October, and yesterday announced a deal to acquire Veracode Software from Broadcom.

If the reported deal goes through, Thoma Bravo will continue expanding its portfolio of cybersecurity companies. No specific offer was mentioned in the report, but Symantec currently has an enterprise value of nearly $15 billion. Enterprise value is a company's market cap plus debt minus cash, and is generally considered an approximation of what an acquirer would need to pay before factoring in any type of premium.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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