Company expects to issue a $12 per share
special dividend to Symantec shareholders after close of
transaction
Board increases existing share repurchase
authorization to $1.6 billion
Transaction enables optimized cost structure
for Symantec’s consumer business to drive revenue growth, cash flow
generation and earnings power
Symantec Corp. (NASDAQ: SYMC), the world’s leading cyber
security company, today announced it has entered into a definitive
agreement to sell its Enterprise Security assets, which include the
Symantec name, to Broadcom Inc. (NASDAQ: AVGO), for $10.7 billion
in cash. The transaction, which was approved by Symantec’s Board of
Directors, is expected to close before the end of the calendar year
pending regulatory approvals.
“Symantec has a long history of offering unparalleled cyber
technology,” said Daniel H. Schulman, Chairman of the Symantec
Board of Directors. “It is a testament to our market leadership and
dedication to the mission of making the world a safer place, that
Broadcom has chosen Symantec’s Enterprise Security assets to expand
their reach into cyber security. By unlocking value from Enterprise
Security, we are significantly advancing our ongoing transformation
strategy and positioning our consumer cyber safety business, Norton
LifeLock, for success.”
“This is a transformative transaction that should maximize
immediate value to our shareholders while maintaining ownership in
a pure play consumer cyber safety business with predictability,
growth and strong consistent profitability. In addition it allows
the Enterprise Security business to grow and compete on an
enterprise platform with a worldwide sales and distribution reach
which can service our existing customers,” said Rick Hill, Interim
President and CEO. He added, “It also allows our Norton LifeLock
business, a world recognized leader in consumer and small business
cyber safety to operate independently and give investors a clear
understanding of the growth opportunity and strong financial
performance.”
Announcement Highlights:
- Sale of Enterprise Security assets delivers $10.7 billion
before tax
- The Company expects to issue a special dividend of $12.00 per
share for shareholders
- The Board of Directors approved an increase of $1.1 billion to
our remaining share repurchase authorization, while maintaining our
current debt levels; the total authorization is now $1.6
billion
- The Company expects to increase the regular quarterly dividend
to $0.125 per share after the close of the transaction, funded
solely by Consumer Cyber Safety’s on-going business and with the
potential to increase future dividends, after the transition period
and once stranded costs are eliminated
- The Consumer Cyber Safety business is steady, predictable and
we believe can grow at mid-single digits, generating strong cash
flow and earnings
- This sale leaves behind underutilized assets that were not part
of the transaction, including owned properties that will be
monetized to cover a large portion of the estimated $1 billion cash
cost to shed the estimated $1.5 billion in stranded costs. We would
have been monetizing these assets as part of our overall strategy,
but now we can do it while not subjecting our shareholders to the
execution risk of such a major undertaking
- This agreement is a major win for both parties’ customers and
shareholders
Upon closing of the transaction, Symantec expects to receive
$10.7 billion, which is estimated to yield approximately $8.2
billion of after tax proceeds. Symantec expects to return
approximately 100% of its after-tax cash proceeds in the form of a
$12.00 per share special dividend to shareholders after the close
of the transaction. We expect to pay the special dividend in the
fourth quarter of fiscal year 2020 and will update the expected
dividend timing on our next quarterly earnings call. In addition,
we expect to increase our regular dividend by 67% to $0.125 per
share in the quarter following the close. The Board of Directors
has approved an increase to our existing share repurchase
authorization up to $1.6 billion. After the transition, we believe
our Norton LifeLock business can generate $1.50 annual non-GAAP
earnings per share and achieve mid-single digit revenue growth year
over year.
Prior to closing we will continue to manage the Enterprise
Security business to best serve our customers, while partnering
with Broadcom to plan for a smooth transition. At close, Broadcom
will assume the Enterprise Security assets, including the Symantec
name as part of their broad infrastructure software portfolio. In
addition, at the close, we will continue to operate our industry
leading and worldwide recognized Consumer Cyber Safety business
which provides Device Security, Identity Threat Protection and
Privacy software that protects consumers and small businesses from
the ever increasing threats posed by cyber criminals around the
globe.
“With a large and growing market, Norton LifeLock products
address consumers’ increasing need for cyber safety,” continued Mr.
Hill. “In the first quarter of fiscal year 2020, our Consumer Cyber
Safety segment contributed 90% of Symantec’s total company
operating income. It is our view that with an operating model
focused on increased marketing investments and product development
for consumer privacy, we can simultaneously grow our subscriber
base and increase our annual revenue per user. We expect this asset
divestiture will enable our Norton LifeLock business to grow
revenue in the mid-single digits, with continued strong cash flow
from operations and expanded earnings growth. It has been my honor
to work with employees from every area of the Company. I can
honestly say there are no more capable and driven people than these
executives, managers, and employees. As we work toward closing this
transaction with Broadcom, we remain committed to protecting our
customers and continuing to focus on operational excellence.”
“This $10.7 billion agreement to sell our Enterprise Security
assets to Broadcom delivers significant value to Symantec
shareholders,” said Vincent Pilette, Executive Vice President and
CFO. “In addition, we have identified approximately $1.5 billion of
annual run rate expenses which we plan to eliminate over the next
12 months at a cash cost of approximately $1 billion. We believe
these cash costs will be materially offset by the sale of
underutilized assets such as real estate. We are focused on
disciplined execution, developing a cost structure that allows us
to fuel growth and continue innovation in our consumer
business.”
The Board of Directors is conducting a search for a permanent
CEO for the consumer business. The Board has engaged with a leading
executive search firm and is considering both internal and external
candidates.
The transaction is subject to regulatory approvals and other
closing conditions.
Goldman Sachs & Co. LLC is serving as financial advisor, and
Fenwick & West LLP is serving as legal advisor, to
Symantec.
Conference Call
Management will discuss the details of this transaction and its
first quarter fiscal year 2020 results on a conference call today,
August 8, 2019, at 5:45 p.m. ET / 2:45 p.m. PT. Interested parties
may access the conference call through Symantec’s Investor
Relations website at
http://investor.symantec.com/investor-relations/events-calendar/.
For telephone access to the conference, call (877) 475-6198 within
the United States or (970) 297-2372 from outside the United States.
Please call 15 minutes early and give the operator conference ID
number 8350238. Symantec today also issued a press release
regarding its first quarter fiscal year 2020 results.
A replay will be available on the investor relations home page
shortly after the call is completed.
About Symantec
Symantec Corporation (NASDAQ: SYMC), the world’s leading cyber
security company, helps organizations, governments and people
secure their most important data wherever it lives. Organizations
across the world look to Symantec for strategic, integrated
solutions to defend against sophisticated attacks across endpoints,
cloud and infrastructure. Likewise, a global community of more than
50 million people and families rely on Symantec’s Norton and
LifeLock product suites to protect their digital lives at home and
across their devices. Symantec operates one of the world’s largest
civilian cyber intelligence networks, allowing it to see and
protect against the most advanced threats. For additional
information, please visit www.symantec.com or connect with us on
Facebook, Twitter, and LinkedIn.
NOTE TO EDITORS: If you would like additional information
on Symantec Corporation and its products, please visit the Symantec
News Room at http://www.symantec.com/news. All prices noted are in
U.S. dollars and are valid only in the United States.
Symantec, the Symantec logo and the Checkmark logo are
trademarks or registered trademarks of Symantec Corporation or its
affiliates in the U.S. and other countries. Other names may be
trademarks of their respective owners.
Forward-Looking Statements: This press release contains
statements which may be considered forward-looking within the
meaning of the U.S. federal securities laws. In some cases, you can
identify these forward-looking statements by the use of terms such
as “expect,” “will,” “continue,” or similar expressions, and
variations or negatives of these words, but the absence of these
words does not mean that a statement is not forward-looking. All
statements other than statements of historical fact are statements
that could be deemed forward-looking statements, including, but not
limited to: the timing of the completion of the transaction; the
amount of net cash proceeds and the amount and distribution of a
special dividend after the close of the transaction; the effects of
the transaction on Symantec’s Consumer Cyber Safety business; the
operating model of the consumer cyber safety business; Norton
LifeLock’s future revenue growth and cash flow from operations; the
annual run rate expenses associated with the enterprise business
and the elimination of those expenses; the use of underutilized
assets to offset transformational costs and the resulting effect on
the value of our Norton LifeLock business for consumers and
shareholders; any other statements of expectation or belief; and
any statements of assumptions underlying any of the foregoing.
These statements are subject to known and unknown risks,
uncertainties and other factors that may cause our actual results,
levels of activity, performance or achievements to differ
materially from results expressed or implied in this press release.
Such risk factors include, but are not limited to, those related
to: the failure to satisfy any of the conditions to the completion
of the proposed transaction; the occurrence of any event, change or
other circumstance that could give rise to the termination of the
Asset Purchase Agreement; whether the Symantec board declares a
special dividend, and its ultimate size, which is based on a number
of assumptions regarding the realizable net cash proceeds from the
transaction and other cash flow items; the effect of the sale of
the Enterprise Security assets on Symantec’s retained businesses
and products; retention of existing executive leadership team
members; difficulties in improving sales execution and product
development during leadership transitions; difficulties in
executing a new operating model for the consumer cyber safety
business; difficulties in reducing run rate expenses and
eliminating underutilized assets; general business and economic
conditions; matters arising out of our completed Audit Committee
investigation and the ongoing U.S. Securities and Exchange
Commission investigation; fluctuations and volatility in Symantec’s
stock price; the ability of Symantec to successfully execute
strategic plans; the ability to maintain customer and partner
relationships; the ability of Symantec to achieve its cost and
operating efficiency goals; the anticipated growth of certain
market segments; Symantec’s sales pipeline and business strategy;
fluctuations in tax rates and foreign currency exchange rates; the
timing and market acceptance of new product releases and upgrades;
and the successful development of new products and the degree to
which these products gain market acceptance. Additional information
concerning these and other risk factors is contained in the Risk
Factors sections of Symantec’s most recent reports on Form 10-K and
Form 10-Q. Symantec assumes no obligation, and does not intend, to
update these forward-looking statements as a result of future
events or developments.
USE OF NON-GAAP FINANCIAL INFORMATION: We use non-GAAP
measures to enhance the user’s understanding of our past financial
performance and our prospects for the future. Our management team
uses these non-GAAP financial measures in assessing Symantec’s
performance, as well as in planning and forecasting future periods.
These non-GAAP financial measures are not computed according to
GAAP and the methods we use to compute them may differ from the
methods used by other companies. Non-GAAP financial measures are
supplemental, should not be considered a substitute for financial
information presented in accordance with GAAP and should be read
only in conjunction with our consolidated financial statements
prepared in accordance with GAAP. A reconciliation of forecasted
non-GAAP earnings per share guidance is not included in this press
release or on the investor relations’ page of our website because
it would be unreasonably burdensome to do so.
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MEDIA CONTACT: Deirdre Sena Symantec Corp. (310) 922-6956
Deirdre_Sena@symantec.com INVESTOR CONTACT Cynthia Hiponia Symantec
Corp. (650) 527-8020 Cynthia_Hiponia@symantec.com
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