UK regulator puts brakes on £6bn takeover of antivirus firm Avast by US rival NortonLifeLock
The takeover of FTSE 100 antivirus group Avast by US rival Norton LifeLock has been thrown into doubt after a warning from regulators.
The £6billion tie-up between Norton and Prague-based Avast was originally announced in August last year and had been due to complete at the start of next month.
However, the Competition and Markets Authority (CMA) pumped the brakes yesterday after it said the tie-up ‘raises competition concerns’ and could be subject to an in-depth investigation.
‘Concerns’: The £6bn tie-up between Norton and Prague-based Avast has been thrown into doubt after a warning from regulators
The watchdog added that as the companies were ‘close competitors’ with few major rivals the deal ‘could lead to a reduction in competition in the UK market’.
‘We are living more of our lives online and it is vital that people have access to competitive cyber safety software when seeking to protect themselves and their families,’ said CMA executive director David Stewart.
He added: ‘Norton LifeLock’s proposed purchase of Avast could lead to a reduction in competition in the UK and ultimately a worse deal for consumers.’
Both Norton and Avast now have five working days to submit proposals to the CMA to address its concerns in order to avoid a detailed probe that could scupper the deal.
Victoria Scholar, head of investment at Interactive Investor, said the regulator’s involvement was a ‘spanner in the works’ for both companies, noting that the CMA’s ‘aggressive response’ could have been brought on by fears of cyber warfare sparked by the Russian invasion of Ukraine.
The move sent Avast’s shares down 13.3 per cent, or 85.6p, to 559.8p, their lowest level in four months.
However, the stock is still 11 per cent higher than in mid-July, when news of a potential deal first broke.
Responding to the announcement, Norton regarded the CMA’s decision as ‘surprising’ but it was confident the merger would be approved and did not plan to make any proposals to the regulator.
Delayed: The takeover was originally announced in August last year and had been due to complete at the start of next month
The company also noted that the deal had already been cleared by authorities in the US, Germany and Spain.
However, as a result of the CMA’s intervention, the Arizona firm now expected the tie-up to be completed in mid-to-late 2022, later than the original date of April 4.
An Avast spokesman said the logic for the merger ‘remains the same’ and that it would continue to collaborate with the CMA in the next phase of the review process.
Founded under the name ALWIL Software in 1991 after the fall of communism in Czechoslovakia, Avast grew into a major player in the global cyber security market and offers customers a range of services including antivirus software, internet browsing security and identity protection.
It floated on the London Stock Exchange in May 2018 with a market cap of nearly £2.4billion, making it one of the biggest tech listings in the UK at the time.
According to its website, Avast has over 435m monthly active users, a customer base Norton is eager to tap into.
If the merger eventually gets the go-ahead, the combined business will have over half a billion customers.