Symantec expects to receive approximately 6,3 billion in cash. It raises the stock buyback program to 2,6 billion dollars and keeps the dividend at 0,15 dollars per share.
Symantec Corp. (NASDAQ: SYMC) announced it has reached a definitive agreement to sell its business information management and availability unit, known as Veritas, at $ 8 billion, to a group of investors headed by Carlyle Group along with GIC, the Singapore State Investment Fund, and other investors. The act of sale, which was unanimously approved by Symantec's board of directors, is expected to be completed by 1 January 2016.
Upon completion of the sale, Symantec expects $ 6,3 billion in capital revenue, subject to some adjustments at the end of the process. Symantec has an integrated approach to capitalizing on this amount, which is summarized both in capital return to shareholders and in further investment in its business.
Symantec's board has already approved $ 1,5 billion to raise its existing share repurchase program by raising its total to 2,6 billion US dollars, while 2 billion dollars are expected to be returned to shareholders in a period of 18 months after completion of the sale. The board has also decided that Symantec will maintain the quarterly dividend of 0,15 dollars per common share, a total amount corresponding to an increase in the share of distributed profits after the company's divestment. Following payment of dividends and repurchase of shares, Symantec expects to return to its shareholders an amount equivalent to approximately 120% of post-tax revenues from the sale.
Michael A. Brown, president and CEO of Symantec, said: "This transaction strengthens our financial position, paving the way for Symantec to grow its business and increase its leadership as the largest company in world in providing cyber security solutions. We believe the deal with investors, including Carlyle Group and GIC, adds business value to Veritas and works in the best interests of all stakeholders."
The Symantec board explored a variety of alternatives strategies to maximize Veritas' value. Before reaching the decision that the sale agreement is in the best interest of the shareholders, the board of directors considered that the transaction generates the best value for Symantec shareholders from the business of Veritas and ensures with certainty the autonomous course and value of Veritas.
The cash transaction provides Symantec with significant liquidity to continue its organic and inorganic investments in the fast-growing market of security products and services, as well as supporting its capital return initiatives to its shareholders through the repurchase of ordinary shares and dividends. Symantec has returned more than 10 billion dollars to its shareholders over the past decade and remains focused on repaying substantial amounts to its shareholders.
Increased certainty of sale simplifies the Veritas separation process for customers, partners and employees.
John Gannon, executive vice president of Symantec and general manager of Veritas, said: “Since the board announced the separation of Veritas, we have prepared the company to operate independently, evolving our business strategy while continuing to deliver leading solutions to our customers. We are excited to be working with The Carlyle Group and GIC, who have an impressive record of successful business development, and that we share with them our dedication to the success of Veritas. The company will continue to provide next-generation information management and availability solutions to serve the world's largest and most complex computing environments, including cloud services, managed services and on-premise infrastructure.”
The Carlyle Group has announced separately that Bill Coleman and Bill Krause will become Veritas' chairman and chief executive officer after the deal ends.
Carlyle Group CEOs Patrick McCarter and Cam Dyer said: “Veritas is a globally innovative company and a brand with significant growth prospects. Bill Coleman's proven leadership skills, strategic vision and executive skills will strengthen Veritas' position as a stand-alone company, expand its operations and continue to provide customers with comprehensive information management and availability solutions. "Our significant experience in investing in software companies enables us to support Bill and the existing management in their efforts to create added value for Veritas."
The entire transaction is subject to a number of regulatory and other approvals. BofA Merrill Lynch, Morgan Stanley & Co. LLC, UBS Investment Bank and Jefferies have agreed to provide debt financing for the sale.
JP Morgan Securities LLC is acting as financial advisor to Symantec, and Fenwick & West LLP and Baker & McKenzie LLP are acting as legal advisors. Accordingly, BofA Merrill Lynch, Morgan Stanley & Co. LLC and UBS Investment Bank are acting as financial advisors to Carlyle and GIC. Alston & Bird LLP, Allen & Overy, Latham & Watkins LLP and Covington & Burling LLP represent Carlyle Group. Ropes & Gray LLP and Sidley Austin LLP are representing GIC.
