Antivirus software maker Avast Software said on Thursday that it would acquire rival AVG (NASDAQ:AVG) for approximately $1.3 billion in cash.
Both security firms were founded in the Czech Republic and now will now unite forces in order to have a better position in the increasingly competitive endpoint security market.
“Avast is pursuing this acquisition to gain scale, technological depth and geographical breadth so that the new organization can be in a position to take advantage of emerging growth opportunities in Internet Security as well as organizational efficiencies,” an announcement reads. “The technological depth and geographical reach will help Avast serve customers with more advanced security offerings in the core business and new innovations in emerging markets, such as security for IoT devices.”
The combined customer base will include more than 400 million endpoints, of which 160 million are mobile, the companies say. The larger customer footprint will help Avast to create better personal security and privacy products, the company says.
AVG’s revenue for 2015 was $428.3 million, compared with $374.1 million for the fiscal year 2014, an increase of 14 percent. For the second quarter ended June 30, 2016, AVG is estimating revenue to be in the range of $104 million to $106 million.
Almost a year ago to the day, Avast announced that it had acquired Remotium, a provider of business-focused mobility solutions that let remote workers access enterprise applications and data from any mobile or desktop device.
In February 2014, Avast received an investment from CVC Capital Partners that valued the software company at $1 billion. The company previously received a $100 million investment from Boston-based private equity and venture capital investment firm, Summit Partners, in August 2010.
AVG has made a number of acquisitions itself over the years. In June 2013 AVG acquired LPI Level Platforms, a provider of remote monitoring and management software solutions. In May 2013 the company acquired PrivacyChoice, a company that helps make privacy easier through a variety of Web and Browser-based tools.
In September 2014, the company announced its acquisition of Location Labs, company focused on securing mobile devices. Other acquisitions by AVG include DroidSecurity in November 2010, and Bsecure in December 2011.
“We believe that joining forces with Avast, a private company with significant resources, fully supports our growth objectives and represents the best interests of our stockholders,” said Gary Kovacs, chief executive officer, AVG. “Our new scale will allow us to accelerate investments in growing markets and continue to focus on providing comprehensive and simple-to-use solutions for consumers and businesses alike.”
The transaction is structured as an all-cash tender offer for all outstanding ordinary shares of AVG at a price of $25.00 per share, which represents a 33% premium over the July 6, 2016 closing price.
Avast said it has received a financing commitment of $1.685 billion from Credit Suisse Securities, Jefferies and UBS.
This transaction has been unanimously approved by the Management Board and Supervisory Board of Avast and is expected to close sometime between September 15, and October 15, 2016. AVG board members have approved and support the transaction and recommend the offer for acceptance to AVG shareholders.
