Symantec Corp. announced earlier this week that it agreed to buy Blue Coat Systems Inc. for $4.65 billion. Because of the purchase, Blue Coat abandoned its plans filed earlier this month to go public.
Blue Coat’s chief executive, Greg Clark, will take over as the chief executive of the new cybersecurity venture, as the Symantec's president and CEO Michael Brown stepped down last month.
Symantec is betting that the purchase will help turn the company around following leadership changes and struggling sales.
The deal will enable Symantec—which was born and thrived under a much different cybersecurity landscape than today's climate—to modernize and add online protection services to its traditional antivirus services.
"With this transaction, we will have the scale, portfolio and resources necessary to usher in a new era of innovation designed to help protect large customers and individual consumers against insider threats and sophisticated cybercriminals," Dan Schulman, Symantec’s chairman, said in a statement.
Symantec has been struggling over the last few years. Symantec's enterprise business dropped 6.7% year over year in fiscal 2016. Last month, Symantec announced that president and CEO Michael Brown was stepping down. The company also recently lowered its revenue guidance for the upcoming quarter to $873 million, down from an expected range of $885 million to $915 million.
But buying Blue Coat, a company that specializes in protecting enterprises and their users from cyber threats on the network, on the web, in the cloud or mobile, may help bring the cybersecurity firm out of its slump. Rather than traditional, and somewhat floundering security software, Blue Coat will allow the company to offer more modern services.
"Once combined, we will offer customers around the world—from large enterprises and governments to individual consumers—unrivaled threat protection and unmatched cloud security," Blue Coat’s chief executive, Greg Clark, said in a statement.
Andrew Nowinski, Piper Jaffray senior research analyst, told CRN last month that Symantec had laid out a cost-savings plan to help it improve profitability, including outsourcing back office positions to India and cutting about 1,200 employees.