Security specialist says takeover will help it provide more advanced services in its core business and address new opportunities in IoT.

Iain Morris, International Editor

July 8, 2016

3 Min Read
Avast Buys AVG in $1.3B IoT Security Move

Cybersecurity specialist Avast Software is to buy rival AVG in a $1.3 billion cash deal that should help it challenge bigger players and address new opportunities in the Internet of Things (IoT) market.

Announced late on Thursday, the deal is the latest in a string of cybersecurity takeovers and comes amid rising concern about the vulnerabilities of emerging technologies.

Headquartered in the Czech Republic, Avast hopes the acquisition of AVG Technologies will give it the technology capabilities and geographical reach to provide more advanced security offerings to core business customers, besides supporting a move into IoT and other nascent markets.

In combination, the two companies will have a network of about 400 million "endpoints," including 160 million mobile devices.

Avast said those endpoints could act as sensors to provide information about malware and neutralize threats as soon as they appear.

It already plans on taking advantage of the increase in scale to develop more sophisticated personal security and privacy products as it battles the likes of Symantec Corp. (Nasdaq: SYMC).

Gary Kovacs, the CEO of Netherlands-based AVG, said that "joining forces" with Avast would fuel growth and be in the best interests of shareholders, who have yet to approve the transaction.

AVG made $107.9 million in revenues in the first quarter of this year -- up 5% on the year-earlier period -- and flagged growth of 57% in "emerging businesses," including mobile.

Net income dropped by 5% over the same period, to $11.3 million.

"As the definition of online security continues to shift from being device-centric to being concerned with devices, data and people, we believe the combined company, with the strengthened value proposition, will emerge as a leader in this growing market," said Kovacs in a company statement.

The offer price works out at $0.25 per AVG share and represents a 33% premium over AVG's closing price on Wednesday. Shares in AVG closed up more than 30% on Thursday on the New York Stock Exchange following news of the deal.

Want to know more about the Internet of Things? Check out our dedicated IoT content channel here on Light Reading.

Avast's move comes weeks after Symantec agreed to pay $4.65 billion for Blue Coat Systems Inc. (Nasdaq: BCSI), a developer of web security solutions for global enterprise customers and governments. (See Symantec Buys Blue Coat in $4.65B Deal.)

Symantec, which develops the well-known Norton antivirus software, expects the Blue Coat takeover to help it address emerging cybersecurity threats and meet the demands of enterprise customers making use of cloud and mobile technologies.

Network operator Orange Business Services has also been on the acquisition trail in the security market, buying threat-intelligence specialist Lexsi for an undisclosed sum in April this year.

Thomas Gourgeon, the head of international business development for Orange's cybersecurity unit, reckons the growing adoption of mobile and cloud technologies is exposing corporations to new security threats.

Orange is currently developing an intelligence database so that it make predictions about security threats before they have caused any damage.

The database gathers information from about 400 sources and stores around 14 million entries today, according to Orange executives.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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