In a Reuters story this week, Symantec
If you rewind back to late 2004, Symantec's stock price was about $33 per share. Taking advantage of its hefty valuation and looking for more growth, the company agreed to buy Veritas for a beefy $13.5 billion, which was the biggest M&A deal in tech history.
So why did the security giant want to buy a storage company that was starting to slow down? Thompson's rationale was fuzzy. But investors were clear; they dumped the stock. Even today, Symantec languishes at $18.75 per share.
Even though Thompson was a veteran of the tech world, he thought he could beat the odds. In fact, just a cursory look at the history of tech deals shows that transformative acquisitions can be disastrous. For example, there was Novell's
Transformative deals are vulnerable to complex integration issues, such as melding sales channels and product lines. The cultural dissension can also be lethal, which plagued megamergers like AOL-Time Warner
Symantec's management seems to have learned from all this, and despite the troubles, I think it's nicely positioned in the marketplace. For example, the company is leveraging the infrastructure for things like on-demand storage, which could be a nice add-on product for Symantec's large customer base. Besides, Symantec is a dominant player in the security market, which is growing at about 10% a year worldwide, according to a recent study from research firm Gartner.
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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 2,509 out of more than 60,000 in CAPS. The Fool has a disclosure policy.