The $14 billion company, best known for its Norton anti-virus
software, has been interviewing top Wall Street banks in recent
weeks, including JPMorgan Chase & Co, Goldman Sachs Group Inc and
Morgan Stanley, the people said on Friday.
JPMorgan, which helped Symantec in the past when the company was the
target of potential activism, is expected to land a role as
Symantec's financial adviser, although a mandate has yet to be
finalized, the people said, asking not to be named because the
discussions are not public.
Symantec has decided to hire a bank as it is worried that its recent
turmoil and management shake-up could potentially attract activist
investors, the people said. Such investors buy shares in a company
with the aim of making management changes.
Some of the large activist funds have already started examining the
company as a potential target, the people added.
A representative for Symantec declined to comment on specifics but
said Symantec commonly hired financial advisers to help the company
with its business. JPMorgan, Goldman Sachs and Morgan Stanley
declined to comment.
A number of well-known technology companies, such as Apple Inc,
Microsoft Corp, Hewlett-Packard Co and Yahoo Inc, have been targeted
by activist investors in recent years as the sector undergoes rapid
change and old technology companies sit on large piles of cash.
Symantec is currently searching for a new CEO after it surprised the
market on March 20 by firing Chief Executive Steve Bennett, who was
on the job for less than two years.
Bennett had been brought in to turn around the faltering company in
July 2012, but the board felt he was not moving quickly enough.
Revenue continued to shrink amid fierce competition from smaller,
more nimble rivals such as FireEye Inc, Palo Alto Networks Inc and
Check Point Software Technologies, the people said.
Symantec's shares have lost 17.5 percent over the past 12 months,
compared with a 1.5 percent rise in the NASDAQ Composite Index. The
stock dropped as much as 14 percent on March 21, the day after news
of the CEO departure.
"We believe the recent price action of Symantec could attract the
interest of activists who could nominate new board members, which
could be supported by existing holders," RBC Capital Markets analyst
Matthew Hedberg said in a research note on Thursday.
Activist investors circled the company in the past.
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In 2010, the company faced pressure from investors, including Ralph
Whitworth's Relational Investors LLC, which pushed the software
company to split its storage and security businesses, Reuters
reported at the time.
Whitworth, who had a position in Symantec and met with company
management to discuss strategy, decided not to launch a public
campaign after stock prices rebounded later in 2010.
A recurring theme with Symantec among investors and analysts is
whether the company should look at selling itself, or unlock value
by separating its businesses.
Symantec entered the data storage business with its $13.5 billion
acquisition of enterprise storage company Veritas in 2005, a move
widely seen as not having reaped the expected benefits.
Last year, speculation also swirled that Symantec might offload
Altiris, an IT management and software business it bought in 2007
for $830 million.
Analysts have said that Symantec would benefit more from selling off
assets within its consumer, storage and server businesses than
looking to sell the whole company, which would be unlikely due to
Based on a sum of the parts, Symantec could be worth $27 a share, or
$19 billion, RBC's Hedberg said. The shares are currently trading
around $20 on the Nasdaq.
"Overall, we think Symantec would benefit from a focus on enterprise
security and compliance where the company could differentiate
through additional M&A," Hedberg said.
He added that while private equity could be an option, the company's
current market and a control premium would make it a very large
transaction and thus very unlikely.
(Reporting by Nicola Leske, Nadia Damouni and Soyoung Kim;
by Nick Zieminski and Dan Grebler)
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