Technology security firm Symantec will buy privately-held information security company Blue Coat for US$4.7 billion (A$6.4 billion) in a cash deal that will ramp up Symantec's enterprise security business.
Blue Coat helps protects companies' web gateways, a service that will complement Symantec's existing offerings for large corporations such as email and endpoint security, Symantec executives.
"Blue Coat brings capabilities from the web and for network-born threats, which combined with what we already offer will provide better protection for our customers," said Ajei Gopal, Symantec's interim president and chief operating officer.
Symantec, which makes the Norton antivirus software, has been undergoing a transformation over the past year. It sold its data storage unit, Veritas, for US$7.4 billion to a group led by Carlyle Group LP in January to gain the cash necessary turn around its core security software business.
CFO Thomas Seifert said Symantec had been eyeing Blue Coat for a while and wanted to wait to have the separation of the Veritas unit behind the company before it made a move to buy it. He said the deal, which is expected to close in the third quarter, would be accretive immediately.
By buying Blue Coat, 62 percent of Symantec's revenue will now come from enterprise security, and it will be better positioned to compete with security players such as Palo Alto Networks, FireEye and Check Point Software Technologies. Symantec will now have US$4.4 billion in combined revenue.
While it is shifting to focus more on enterprise security, Symantec has no immediate plans to sell its consumer unit, Seifert said, adding that it is a highly profitable part of the company.
By buying Blue Coat, Symantec also solves a leadership issue, with Blue Coat CEO Greg Clark becoming Symantec's CEO. Symantec's previous CEO, Michael Brown, left in April after the company reported disappointing quarterly results.
Blue Coat had been preparing an initial public offering for later this summer. Its sale marks a quick turnaround for its private equity owner, Bain Capital LLC, which acquired Blue Coat Systems from fellow private equity firm Thoma Bravo for US$2.4 billion last year.
"We enjoyed a very productive partnership, and are excited to be a significant investor in the future of Symantec as the leading cyber security company in the world," Bain managing director David Humphrey said in a statement. Humphrey will join Symantec's board as the firm agreed to invest US$750 million in convertible notes.
Technology-focused private equity firm Silver Lake Partners also agreed to invest US$500 million in convertible notes of Symantec, which doubles its investment in Symantec to US$1 billion.