Activist investors, including ValueAct Capital, are examining the
company's prospects and may decide to build up stakes to agitate for
change, the sources said. ValueAct declined to comment.
At the same time, a number of private equity firms, including Bain
Capital, Blackstone Group LP and Carlyle Group LP, have started
assessing the possibility of a leveraged buyout of all or parts of
Symantec, the sources said. Bain did not respond to requests for
comment, while the rest of the private equity firms declined to
Symantec, best known for its Norton antivirus software, is worth
about $14 billion at its current stock price. It declined to
Some private equity firms have approached Symantec in recent weeks
to discuss deal possibilities, but the sources said there are no
serious conversations going on for now. They cautioned that it was
too early to tell if those conversations will get any traction.
It was also not clear whether any activist had built up a stake in
the company. Sources said at least two major activist investors had
decided against building up positions in the company because they
thought there were limited profits to be had from it.
Before the company enters into a dialogue with any potential buyers,
Symantec's board and management, led by interim CEO Michael Brown,
are trying to chart a business plan and find a full-time chief
executive, the sources said.
Symantec has hired executive search specialist Russell Reynolds
Associates to look for a new CEO, a source close to the matter said.
Russell Reynolds declined to comment.
Earlier this month, sources had said that Symantec was close to
hiring JPMorgan Chase & Co for advice on strategy and to defend
against potential activist investors.
JPMorgan has since been enlisted as its financial adviser, the
sources said. The bank declined to comment.
Symantec's board is expected to discuss options for the company at a
meeting this month ahead of the release of company earnings
scheduled for May 8, the sources said.
The external interest, including from typically vocal parties such
as activist shareholders, in the company means that Symantec may
have to act quickly.
Symantec, which also offers data storage products, has seen revenue
growth turn negative in recent quarters, unlike the rest of the
security software market, which is growing at least 10 percent to 15
The slowdown is partly due to eroding PC sales, affecting demand for
its software, which often comes bundled with new computers. It has
failed to gain a strong footing in the market for mobile security.
It has also been lagging smaller, more nimble rivals such as FireEye
Inc, Palo Alto Networks Inc and Check Point Software Technologies
Ltd that are focused on network security, one of the hottest areas
in that market.
[to top of second column]
Symantec's shares have lost about 17 percent over the past 12
months, compared with a 26 percent rise in the S&P 500 Systems
Software index. The stock dropped as much as 14 percent on March 21,
the day after news of Bennett's departure. He was the second
Symantec CEO in two years to have been shown the door.
SUM OF PARTS
Analysts have said that Symantec would benefit from selling off
assets within its consumer, storage and server businesses.
They calculate that its individual businesses could add up to $25 to
$28 per share, giving it a value of around $16 billion to $19
Symantec's stock was trading close to $20 on Tuesday.
Although some analysts said the company would be too large for a
private equity firm to buy, the sources said buyout shops are
examining that possibility. Since buying the entire company would
require an equity check of $4 billion to $5 billion, they might look
to pool resources, the sources said.
Private equity firms are also looking at the possibility of breaking
up Symantec into smaller pieces, some of which may also be
attractive to industry peers, according to the sources.
The storage business, for example, could be attractive to companies
such as NetApp Inc and IBM Corp, one of the sources said.
NetApp was not immediately available for comment. IBM declined to
Symantec's desktop management unit Altiris, which it bought in 2007
for $830 million and was considered tangential to its main business,
could also be a potential asset divestiture, analysts have said.
Separating some of the businesses to sell may not be easy, however,
as they have been integrated into the company and may have a low
cost basis, which would trigger a hefty tax bill, the sources said.
(Additional reporting by Soyoung Kim and Greg Roumeliotis;
by Paritosh Bansal, Lisa Shumaker and Jonathan Oatis)
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