Symantec to take $1B less for Veritas as part of focus on core security business
Security firm Symantec will get $1 billion less from The Carlyle Group for its data backup and storage unit Veritas, the company admitted on Tuesday.
In August, Symantec said it had agreed to sell Veritas for $8 billion to Carlyle as part of its effort to focus on its core security business. But on Tuesday, the firm announced that it would receive $7.4 billion for Veritas, and that drops to a net consideration of $7 billion after adjustment is made to the amount of offshore cash remaining in Veritas. Symantec paid $13.5 billion for it in 2005.
Symantec said it would receive $6.6 billion in cash and a $400 million equity interest in Veritas. This would only amount to $5.3 billion in after-tax cash proceeds and equity interest in Veritas compared to $6.3 billion in after-tax proceeds under the original deal.
The two firms renegotiated the deal based on "uncertainties" regarding the transaction. "In a difficult environment, we can move forward with a high degree of certainty around closing a transaction that represents attractive value for shareholders. In addition, this transaction will allow Symantec to further focus and accelerate its strategy as the world's leading cybersecurity company," said Michael Brown, Symantec president and CEO.
According to Reuters, the deal was renegotiated after banks struggled to syndicate a $5.6 billion debt package because of volatility in the leveraged finance market. In addition, Veritas' performance declined after Symantec signed the original deal with Carlyle, which gave Carlyle more leverage to renegotiate the deal, according to people familiar with the matter who talked to the newswire. The deal is expected to close on Jan. 29.
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