Contact: Scott Denne
Five months after a multibillion-dollar bid to retool its enterprise security business, Symantec has made a parallel play for its consumer security unit. The maker of Norton antivirus software has acquired LifeLock, an identity-protection services company, for $2.3bn. The purchase could bring Symantec’s consumer business back to growth, but it seems to pull the infosec company further into two distinct markets – a problem it struggled with in the past, and mostly solved with its divestiture of Veritas in 2015.
At $2.3bn, Symantec values LifeLock at 3.5x trailing revenue, bringing the target its highest share price ($24) since its 2012 IPO. Symantec itself trades above 4x, so picking up a company that can help its consumer security business escape from years of declines at a discount to its own valuation is a positive. Wall Street seems to agree. Following an initial negative reaction, as of midday on November 21, Symantec shares are trading up almost 5% from Friday’s close.
Revenue from Symantec’s consumer business declined double digits in each of the last two years, although the slide slowed recently, declining just 3% last quarter. LifeLock, by comparison, grew trailing revenue to $650m, up 16% from the previous year. Although LifeLock’s services, which help detect and prevent identity theft, and Symantec’s antivirus offerings are quite different products, it’s easy to see how the two would be able to upsell each other’s existing customers.
Yet the deal seems to move Symantec’s consumer products further out of the orbit of its larger enterprise security business, which it expanded earlier this year with the $4.6bn acquisition of Blue Coat Systems. Symantec’s enterprise and consumer business already operate independently – the two businesses even have separate IT infrastructure to serve each unit. The addition of tech and services aimed at protecting the individual, rather than the device or network, makes that division more pronounced. That has us wondering whether this deal could set the stage for another Symantec spinoff.