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NortonLifeLock sniffs around Avast, announces 'advanced discussions' for acquisition

Company now has 28 days to make up its mind

NortonLifeLock, the somewhat clunky moniker adopted by the former consumer business arm of the Symantec Corporation, has announced "advanced discussions" with rival Avast over a possible merger.

"A combination of NortonLifeLock and Avast would bring together two companies with aligned visions, highly complementary business profiles and a joint commitment to innovation that helps protect and empower people to live their digital lives safely," a NortonLifeLock spokesperson claimed in a message to investors.

"We would draw on the best of both companies to ensure that the combination would benefit our customers, reward our employees and maximise long term value for all shareholders."

Founded in 1982 by Gary Hendrix off the back of a grant from the National Science Foundation, Symantec's start was in artificial intelligence and productivity products. In 1990 the company acquired Peter Norton Computing, taking on the latter's Norton-branded DOS utilities - and, of note, its security and antivirus products, which would eventually become the company's primary focus.

The consumer wing of Symantec rebranded to NortonLifeLock, inspired by its 2016 acquisition of identity theft firm LifeLock, after the enterprise software element was sold to Broadcom for $10.7bn in 2019. Today, it still specialises in security products aimed at the consumer - which have sometimes mined cryptocurrencies and auto-renewed when they perhaps shouldn't.

Consumer security is precisely where Czech rival Avast has its sights set. Founded in 1988 by Eduard Kučera and Pavel Baudiš as Alwil and focusing on antivirus from the get-go - with Baudiš responsible for developing the first program to remove the Vienna virus from infected systems - the company has its own-brand security software and operates AVG Technologies, Piriform, and HMA as subsidiaries.

The company's history is not untouched by controversy, however: its Avast- and AVG-branded browser extensions were dropped after they were found to be selling users' browsing histories to a third party, which the company promised to stop - only for an update to open a man-in-the-middle vulnerability in the Avast AntiTrack privacy tool.

NortonLifeLock announced it was investigating making a cash and share offer for the entirety of Avast and subsidiaries, but that it "reserves the right to vary the form and/or mix of the consideration."

The company was also keen to point out that has not yet made a firm offer, nor even announced "a firm intention to make an offer," and that "there can be no certainty that any firm offer for Avast will be made nor as to the terms on which any firm offer might be made."

Regulation now gives the company 28 days to either announce such a firm intention or to drop the whole plan. "A further announcement will be made," the company stated, "as appropriate."

"If it does go through, this will be one of the most significant consumer security deals in recent history," opined Indraneel Arampatta, of tech-sector analyst Megabuyte, on the possible merger. "It seems as the old sleeping giants have come alive in the last few years, now mobilising and consolidating in the face of greater competitive threats from specialist consumer security upstarts and scale-ups (especially in the VPN world) and the enterprise security world.

"One unique angle to this acquisition is Avast’s wildly successful freemium model: Avast has around 400 million users, most of which are still on the free product, providing a rich base to potentially convert into paying customers. In a market where churn is particularly high, and consumers are incredibly price sensitive, this is a rather valuable differentiator.

"For Norton, Avast also provides a strong boost outside of the US: while Norton does have an international model, the US is the core and where the brand is strongest, with Europe, Asia, and Africa dominated by regional players."

Avast, whose share price rose nearly 13 per cent on the news, confirmed that it was in talks with NortonLifeLock, but reiterated the point that "there can be no certainty as to whether any transaction will take place" between the two. ®

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