Symantec Corp. and its Rockville-based rival, Axent Technologies Inc., will combine forces to thwart hackers and rid the corporate world of computer viruses in a stock-for-stock purchase valued at $975 million, the two companies announced yesterday.
Cupertino, Calif.-based Symantec, the largest maker of computer security software for consumers, is offering Axent shareholders one-half share of Symantec stock - a $31.84 value at Wednesday's closing price - for each share of Axent stock they own. That represents a 67 percent premium over Axent's closing price Wednesday, before the purchase was announced.
The combined company's headquarters will be in Cupertino, but officials with both companies said yesterday that it was too early to estimate how employees in Rockville and elsewhere will be affected. Axent, which provides major corporations with security systems for tracking hacker attacks on computer networks, employs about 100 in Maryland and 650 companywide.
"This business is all about people, and the reason that Symantec was interested in Axent was primarily because this provides a comprehensive security solution for our customers and it builds the largest entity worldwide that can deliver that security," said Greg Coticchia, vice president of marketing for Axent.
Analysts mostly praised the deal, saying it will give Symantec entry into the fast-growing markets Axent specializes in.
"It's a logical move for Symantec," said Alan Adler, an analyst with Friedman, Billings, Ramsey. "They've been looking to expand from their antivirus and filter products into the more higher-end enterprise market ... and Axent is very strong in those markets."
Skittish investors punished Symantec, sending its stock tumbling $13.4375 to close at $50.25 per share. Axent climbed $4.9333 to close at $24. Symantec will issue 15.3 million shares to Axent shareholders, who will own 19 percent of the combined company.
Analysts said they expect Symantec's stock to recover once investors have time to analyze the benefits of the deal for the company, which is best known for its Norton Utilities and Norton AntiVirus software.
The consumer market for such software is growing more slowly than the market for security programs aimed at protecting corporate computer networks. Symantec has been trying to develop products to beef up its offerings for corporate customers, who are increasingly looking for one-stop shopping for network security as they increase business on the Internet.
Axent gives Symantec a shortcut into those markets, bringing clients such as MCI WorldCom Inc., Exxon Mobil Corp., Xerox Corp. and Unilever PLC to the table.
"The margins are huge, vs. selling shrink-wrapped boxes [of anti-virus software] at your local software shop," said Kevin Wagner, an analyst with Adams Harkness.
Axent had $112.8 million in sales last year and Symantec had $745.7 million. The companies expect the deal to close by the end of the year.