What happened
Shares of NortonLifeLock (GEN 0.93%) fell hard today after U.K. regulators said they were investigating the company's proposed merger with rival cybersecurity company Avast.
The tech stock was down by 13% at the end of the trading day.
So what
NortonLifeLock proposed the purchase of Avast back in August (a cash and stock deal worth $8.6 billion) and was expected to close on it on April 4.
The deal would create a large cybersecurity company with 500 million customers. But today, Britain's Competition and Markets Authority (CMA) said that the deal "could lead to a reduction in competition" in the U.K. and that consumers could get "a worse deal when looking for cyber safety software in the future."
Image source: Getty Images.
As a result, the two companies now have five working days to submit proposals to address the competition concerns. Once they're reviewed, the CMA will then decide whether they will refer the case for a more in-depth investigation or not.
Obviously, this is not what NortonLifeLock or its investors wanted to hear today. The company said in a statement that "the decision is surprising" and that it will "continue to constructively engage with the CMA and their review."
Now what
NortonLifeLock said in a press release that it now expects to close the deal in mid to late 2022 but added that the timeline could also change.
Investors will clearly want to keep an eye on any upcoming information about the merger in the coming weeks and whether or not NortonLifeLock can assuage the CMA's competition concerns.
