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UK-listed cyber security firm Avast sold to NortonLifelock in deal worth up to £6.2bn

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The logo of Avast Software company is seen at its headquarters in Prague, Czech Republic, April 12, 2018.  REUTERS/David W Cerny
The new company will be dual headquartered in Prague and Arizona, US. Photo: Reuters

FTSE 100 (^FTSE) cyber security company Avast (AVST.L) has agreed to a merger with Nasdaq-listed NortonLifeLock (NLOK), the parent company of Norton antivirus software, in a deal valued at as much as $8.6bn (£6.2bn).

The new company, the name of which is yet to be decided, will be listed on the Nasdaq and have headquarters in Avast's native Prague as well as Arizona in the US.

Avast's shares were up 2.7% on Wednesday morning in London following the announcement, while Norton's stock was ticking 0.4% higher in pre-market trade in the US. Deal talks were first disclosed in the middle of last month.

“The boards of NortonLifeLock and Avast believe the merger has compelling strategic logic and represents an attractive opportunity to create a new, industry leading consumer cyber safety business, leveraging the established brands, technical expertise and innovation of both groups to deliver substantial benefits to consumers, shareholders and other stakeholders,” the companies said in a statement.

Avast shareholders will be entitled to a mix of cash and shares. They can choose between majority cash and majority stock options. Depending on their choice, the deal values Avast between $8.1bn and $8.6bn.

Read more: FTSE 100 rises as $1tn US infrastructure bill spurs global markets

"This transaction is a huge step forward for consumer cyber safety and will ultimately enable us to achieve our vision to protect and empower people to live their digital lives safely," said NortonLifeLock chief executive Vincent Pilette.

"With this combination, we can strengthen our cyber safety platform and make it available to more than 500 million users."

The deal comes as "cyberattacks and ransomware attacks are becoming more common now that more people are working from home and hackers are becoming more sophisticated," Daniel Takieddine, a senior market analyst at FXPrimus, told Yahoo Finance UK.

Some 1,000 jobs at the new company could be cut due to overlaps in responsibility, Bloomberg reported.

Avast published interim results alongside the merger announcement on Wednesday. Revenue for the first half of 2021 rose 8.5% to $471.3m, thanks to a reduction in costs. Pre-tax profit was $269.3m, up from $115.3m the year before.

"We are optimistic about Avast's prospects for the second half of the year, and as comparator period trends start to normalise, we anticipate a re-acceleration of billings growth," chief executive Ondrej Vlcek said.

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