News

Software mergers continue: Symantec buys Veritas

• By John K. Waters
• December 27, 2004

The wave of consolidations sweeping the software industry has picked up two leading security vendors. Leading consumer antivirus maker Symantec Corp. and top enterprise storage and backup management products vendor Veritas Software announced this week that they will be tying the knot in the New Year.

Cupertino, Calif.-based Symantec will acquire its Mountain View, Calif.-based neighbor for $13.5 billion, and the merged company will keep the Symantec name. The all-stock acquisition is expected to give the combined organization the chops to take on big security and storage vendors like IBM, Hewlett-Packard, EMC, and Computer Associates. The move supports Symantec CEO John W. Thompson's well-known strategy to take his company beyond consumer security markets.

"This is an important event not just for our firms, but for the industry at large," Thompson said in a statement. "It has created the largest, fastest-growing, and most efficient software company in the world.”

The agreement calls for Thompson, and ex-IBMer, to continue as chief exec. Veritas' CEO Gary Bloom will become vice-chairman and president. The transaction may be the largest software acquisition ever. In comparison, Oracle Corp paid about $4 billion less for PeopleSoft.

Symantec has been on a steady path of innovation through acquisition. The Veritas products will add to technologies the company picked up last year with the acquisition of PowerQuest, a maker of hard-drive management and data back-up software. Symantec recently bought Platform Logic, a maker of host-based intrusion prevention technology, @stake, an application security consulting firm, and TurnTide and Brightmail, both anti-spam vendors.

Industry watchers have been speculating that Symantec is muscling up for the inevitable fight with Microsoft for control of the security market. Last week, the Redmond software giant acquired anti-spyware vendor Giant Company Software. In 2003, Microsoft bought a desktop security vendor called Pelican Software and an antivirus company called GeCad.

  However, Thompson brushed away any suggestion that the Veritas acquisition was a defensive move. He called it a "powerful combination with enormous synergies and leverage.”

“This is not a typical merger,” he said. “It is about two market leaders coming together with compatible strategies. We have no overlap in product lines or R&D."

Meanwhile, the Symantec-Veritas deal turned the spotlight on the other top antivirus maker, McAfee Inc., based in nearby Santa Clara. Industry watchers see McAfee as a likely acquisition target. The most likely suitor: Microsoft.