Symantec to buy Veritas for US$13.5 billion

Symantec and Veritas on Thursday said their decision to merge in a US$13.5 billion transaction will meet the needs of IT managers who are seeking an over-arching

solution to their security and storage challenges.

Under the terms of the agreement, which is expected to close in the second quarter of next year, the merged firm will operate under the Symantec name and will continue to be lead by Symantec chief executive John Thompson. The two companies said their combined aggregate revenue is expected to be approximately US$5 billion, with approximately 75 percent of the revenue expected to come from the enterprise business. Symantec is best known for its Norton line of firewall products, while Veritas organizes its portfolio of storage software under the CommandCentral suite.

Security and storage represent some of the leading areas of IT growth, according to market research firm IDC, which has forecast worldwide spending on security and business continuity to research more than US$116 billion by 2007. In Canada, companies like IBM have committed US$40 million to grow its security business, while Evans Research recently said total revenues for enterprise storage firms in the third quarter of this year were up 15 per cent compared to the same time last year.

“”Buying software where they wanted to resist viruses and some of other mischief, and then solutions to combat errors or natural disaster — those were separate (purchases),”” Mark Bregman, Veritas’s CTO, told “”Now they are components of a broader sort of thing.””

Although Symantec and Veritas operate in different product categories, Bregman said the merged firm would have a wide set of products and capabilities. “”What we’re doing is recognizing that customers’ information is as important to us as it is to them,”” he said. “”Security and availability are two adjacent pieces.””

Ajei Gopal, Symantec’s senior vice-president of global technology and corporate development, said initial areas of synergy would include e-mail management, where Symantec offers products to combat spam through its acquisition of BrightMail, for instance, and Veritas has products for e-mail archiving. Both firms also have products designed to help enterprises comply with various regulatory requirements, such as the Sarbanes-Oxley legislation in the United States and the Personal Information Protection and Electronic Documents Act in Canada.

In the long term, Gopal said the combined entity would be able to create a more integrated product set that would allow IT managers to set up a more effective early warning system that would predict threats to a network before they happen. As a virus attack loomed, for example, the system might advise of mission-critical data that would need to be backed up.

“”We’ll have the ability to give customers real insight on the threat situation that’s out there,”” he said.

The merger, which had been rumoured since a New York Times story earlier this week, took several IT industry professionals off guard.

“”That surprised me when I heard about that one,”” said Tom Jenkins, the chief executive of content management specialist Open Text, who was in Toronto on Wednesday to promote his recent book. “”I guess you could make an argument for anything, but putting security within storage . . . I would think those would be approached a bit differently.””

Brian Olafson, sales director at Micro Alternative Solutions in Markham, Ont., said he would be waiting to see how the merged firm would be structured.

“”Veritas is very much a standalone product when compared to anything inside if Symantec. It’s a separate product altogether,”” said Olafson, who resells products from both firms. “”As it sits right now, really none of Symantec’s products integrate in any way, shape or form with Veritas’ principle business suites.””

Jenkins noted that mergers between unexpected players can have ripple effects within the industry. When storage giant EMC bought content management firm Documentum last year, for example, he said that opened up partnership opportunities for Open Text with other storage players like Hitachi. Olafson said he might have expected the likes of an EMC to buy Veritas.

Gopal refused to comment on the fallout the merger would cause among competitors. “”We’re concentrating on building a world-class solution provider,”” he said. “”Other people will do what they have to do.””

— With files from Neil Sutton

Comment: [email protected]

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