Symantec & Veritas: It's a Deal

The boards of Veritas Software Corp. (Nasdaq: VRTS) and Symantec Corp. (Nasdaq: SYMC) have unanimously agreed to merge in an all-stock deal valued at about $13.5 billion, based on Symantec's share price of $27.38 at market close yesterday.

Terms of the agreement call for Veritas stock to be converted into Symantec stock so that Symantec shareholders will own about 60 percent of the new firm and Veritas shareholders about 40 percent.

The company will retain the Symantec name. The deal is expected to close in the second quarter of next year.

In a conference call this morning, Gary Bloom, CEO of Veritas, and John W. Thompson, CEO of Symantec, said the combined firm will be the fourth-largest software company in the world and the fastest-growing one in the revenue bracket above $3 billion.

"This is a powerful, powerful combination with incredible synergies and leverage," Thompson told analysts. "I can't think of anything more important to CIOs than security and availability of their data."Thompson will become chairman and CEO of the new combined company, and Bloom will be its vice chairman and president. The board will have six members from Symantec's current board and four from Veritas's.

Analysts hammered the two CEOs this morning about the difficulties of merging the two firms, which appears to be Wall Street's main concern with the transaction. There were a range of questions dealing with everything from retaining employees to ensuring growth will be maintained not just at present levels, but, as the CEOs have claimed, at 18 percent for 2006, greater than either company individually.

To each question, Thompson energetically defended the merger, as Bloom more calmly backed him up. Asked about the chance that the combined sales force of 3,500 employees might result in layoffs, for instance, Thompson said: "This is not about cost cuts, it's about leveraging the investment model each company had in place... I don't think this is rocket science, guys. This is work both sides of our team know how to do because they've done it before."

Questions about customer and OEM relationships were met with similar certitude. Customers will like having fewer vendors to deal with, Bloom said. And OEM agreements will be dealt with individually.

For now, the leaders say their focus will be on getting 13,000 employees organized about product roadmaps and strategies. Thompson says the challenge here will not be what can be done, but how much can be done. "Our challenge will be how to distill the ideas. With 13,000 people who are jazzed about this, I suspect we're not going to have a shortage of ideas."Mary Jander, Site Editor, Byte and Switch