Update: Symantec will buy Veritas for $13.5B in stock

Symantec will buy Veritas Software in an all-stock transaction, the companies announced Thursday. Based on Wednesday's closing stock prices, the deal values Veritas at around $13.5 billion, they said.

The deal is expected to close in the second quarter of 2005, subject to customary closing conditions. Symantec shareholders will own around 60 percent of the merged company, which will retain the Symantec name, the companies said in a joint announcement.

Veritas, based in Mountain View, California, sells backup, archiving and file system software. Symantec, of Cupertino, California, sells software to protect home and office computer systems and networks, including firewalls and tools to detect viruses and network intrusions. By joining forces, they will be able to help enterprise customers secure their information better, the companies said. About three-quarters of the combined company's revenue will come from enterprise products and services, they said.

Symantec Chairman and Chief Executive Officer John Thompson will continue in that role, while his opposite number at Veritas, Gary Bloom, will become vice-chairman and president of the combined company. The new board will be composed of 10 members, six chosen from Symantec's board and four from the Veritas board, the companies said.

A combined company has greater opportunities for growth than either company separately, Thompson said in a conference call with journalists and analysts Thursday. "This is not your typical merger focused on removing cost and redundant infrastructure," he said.

Bloom will take day-to-day responsibility for sales, service and support, Thompson said.

For his part, Bloom said that a single company that can both secure its customers' data, and make that data more available, represents a unique value proposition. Giving an example of how the companies' products could work together in response to a virus outbreak, he suggested that backup software could be triggered to automatically restore clean software and data.

How long such integration will take is an unanswered question, as the people who will do the programming have been kept in the dark about the deal until now, according to Thompson. "Now that the transaction is public, we can start the integration process, and start getting some of our engineers together," he said.

Nevertheless, Thompson expects the companies' 13,000 staff will be "jazzed up" about the deal, and will have plenty of ideas for what they can do together. "Within a few weeks, the ideas will be all over the place," he said. After that will come the task of identifying which ideas can be implemented, he said.

"Putting integration aside, the number one focus is on this quarter," he said.

The companies expect to report $5 billion in combined revenue in their first financial year together, from April 2005 to March 2006, according to Symantec's Chief Financial Officer Greg Myers.

Both boards of directors have approved the deal, which now requires the approval of regulators, and of the shareholders of both companies. Symantec has offered Veritas stockholders 1.1242 Symantec shares for each Veritas share they hold. With Symantec's stock price standing at $27.38 when the market closed Wednesday, that values the deal at around $13.5 billion, the companies said.