NEW YORK (The Deal) -- The Carlyle Group (CG) - Get Carlyle Group Inc Report is leading an $8 billion leveraged buyout that will take Veritas off the hands of Symantec (SYMC) - Get Symantec Corporation Report. Singapore government fund GIC and unnamed co-investors are joining the Washington-based private-equity firm in the deal.
Symantec, a pioneer of computer security in the 1980s with antivirus software, had been planning to spin off Veritas, which develops software for data storage, server management, backup, disaster recovery and other processes.
CEO Michael Brown said the sale to Carlyle "provides certainty to value" for shareholders, while launching Veritas as a new public company would give shareholders a security with unpredictable value. The transaction is also simpler than the spinoff and would allow Symantec to focus more fully on cybersecurity.
Symantec said it expects to have $6.3 billion in proceeds from the deal after taxes and other costs, 35% of which will reside in the U.S. The company is increasing its share buyback by about $1.5 billion to $2.6 billion, and could use some of the funds to acquire security companies.
"It continues to be fragmented," Brown said of the cybersecurity industry.
Symantec acquired Veritas in 2005 for $13.5 billion in stock. The company said last fall that it would spin off Veritas, as its sales had lagged.
Regarding Veritas, one analyst on call said that "it would be nice not to say that word again" and asked how shareholders should think about future acquisitions.
"We would acknowledge that our history (of acquisitions) has been a bit mixed," Brown said, but noted that Symantec had done successful deals like its $350 million purchase of data loss-prevention company Vontu Inc. in 2007.
While focusing on cybersecurity. Symantec does not want to compete with Palo Alto Networks (PANW) - Get Palo Alto Networks, Inc. Report or Cisco Systems (CSCO) - Get Cisco Systems, Inc. Report in network security, Brown explained.
But he said that encryption, protecting user identities and analyzing use of data on dispersed networks are "a bright opportunity."
Brown said, "As more workloads move into the cloud we need to make sure that data is protected."
Carlyle and its co-investors named Bill Coleman as CEO of Veritas and Bill Krause as chairman.
Coleman was the founder, chairman and CEO of BEA Systems, which Oracle (ORCL) - Get Oracle Corporation Report acquired in 2008. He was also founded and ran Cassatt Inc., an enterprise cloud software company acquired by CA Inc. (CA) - Get CA, Inc. Report in 2009.
Krause is a former chairman and CEO of 3Com Corp., which Hewlett-Packard (HPQ) - Get HP Inc. Report acquired in 2009 for $2.7 billion. Among other posts, he is a director for Carlyle portfolio company CommScope Inc.
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