(Bloomberg) -- Symantec Corp. is preparing to acquire Blue Coat Systems Inc. for about $4.65 billion in cash, a deal that will add to its cyberdefense technology and fill a high-turnover chief executive officer position.
Blue Coat CEO Greg Clark will take the helm of the combined corporation and join its board after the deal closes in the third quarter, both companies said in a statement. Clark will become Symantec’s fourth CEO in as many years, fulfilling its search for a leader with experience running a cybersecurity company and providing what investors hope will be much-needed stability. He replaces Michael Brown, who had overseen the January sale of Symantec’s Veritas data-storage division for $7.4 billion to the Carlyle Group LP.
The Mountain View, California-based company is in the midst of a major transition as it tries to recapture its momentum in the fast-growing cybersecurity market. The world’s largest developer of security software -- which reduced its sales and earnings forecasts in April -- is trying to re-invent itself for an industry that’s now vastly different from the antivirus software arena it helped pioneer.
“With this transaction, we will have the scale, portfolio and resources necessary to usher in a new era of innovation designed to help protect large customers and individual consumers against insider threats and sophisticated cybercriminals,” Dan Schulman, chairman of Symantec, said in the statement.
Clark will assume leadership of a company that’s fallen behind Palo Alto Networks Inc., FireEye Inc. and other younger rivals in developing technologies to detect more advanced threats. Blue Coat brings a suite of products that can make Symantec more competitive in areas such as protecting customers’ data in the cloud, performing digital forensics in the hunt for hackers, and managing encrypted network traffic.
Symantec had been in advanced talks to acquire FireEye earlier this year, according to a person familiar with the matter. But discussions broke down over Symantec’s concerns about FireEye’s future growth potential, the person said, declining to be identified because the discussions were private. Like Symantec, FireEye is struggling with competition and had also recently cut revenue forecasts.
Talks with Blue Coat then accelerated, the person said. As part of the deal, Bain Capital LLC, which controls the target company, will put $750 million of its proceeds from the sale into the combined company. Private equity firm Silver Lake will double its investment to $1 billion. The Blue Coat transaction should help Symantec realize another $150 million in annual net cost savings, on top of a previously announced $400 million yearly reduction in expenses, they said.
The Wall Street Journal first reported on the acquisition Sunday.
--With assistance from Kevin Miller
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