What Symantec Will Look Like Without Veritas
As Symantec reported its most recent quarterly results, it confirmed its plans to spin off its information management business.
As Symantec Corp. (NASDAQ: SYMC) reported its most recent quarterly results, it has now confirmed its plans to spin off its information management business, Veritas. Previously Symantec acquired Veritas in an all-stock deal valued at roughly $13.5 billion, but now the company is looking to sell it for less than half of this original value. However this deal is still subject to regulatory approval.
The company reported its fiscal first-quarter financial results before the markets opened on Tuesday. It had $0.40 in earnings per share (EPS) and $1.50 billion in revenue, compared to Thomson Reuters consensus estimates of $0.43 in EPS on $1.53 billion in revenue. In the same period of the previous year, Symantec posted EPS of $0.45and revenue of $1.74 billion.
Symantec announced that it has entered into a definitive agreement to sell its information management business, Veritas, to an investor group led by Carlyle Group, together with GIC. The transaction is expected to close by the beginning of January 2016.
Upon closing of the transaction, Symantec expects to receive approximately $6.3 billion in net cash proceeds.
Ultimately the all-cash transaction provides Symantec with significant proceeds to continue organic and inorganic investments in the rapidly growing market for security products and services, and to support its capital return initiatives through the purchase of common stock and its dividend.
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Michael Brown, Symantec president and CEO, stated:
This transaction strengthens our financial foundation, paving the way for Symantec to grow its security business and increase its lead as the world’s largest cybersecurity company. We believe the agreement with the investors, including The Carlyle Group and GIC, delivers an attractive and certain value for the Veritas business, and is in the best interests of all stakeholders.
John Gannon, Symantec’s executive vice president and Veritas general manager, commented on the spin-off as well:
Since the Board first announced the separation of Veritas, we have been preparing the company to operate independently and evolving our business strategy, while continuing to deliver industry-leading solutions to our customers. We are thrilled to partner with The Carlyle Group and GIC, which have a strong track record of successfully growing businesses and share our dedication to Veritas’ strategy and success. Veritas will continue to provide next-generation information management solutions to serve the world’s largest and most complex environments, including multiple cloud deployments, managed services and on-premise infrastructure.
Shares of Symantec opened Tuesday at $22.58, in a 52-week trading range of $21.66 to $27.32. The stock has a consensus analyst price target of $25.39.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
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