NortonLifeLock-Avast deal given nod from UK government after competition concerns

The Competition and Markets Authority provisionally concluded the deal does not raise competition concerns in the UK

NortonLifeLock's plans to acquire Avast for £6bn has been given the green light from the UK government following an investigation.

The plans for the merger were announced in August 2021, with NortonLifeLock claiming the deal will create an "industry leading" consumer cybersecurity business.

But the Competition and Markets Authority (CMA) launched a deeper inquiry into the move in March 2022 after noting competition concerns during an initial Phase 1 investigation.

Following a more detailed Phase 2 investigation, the CMA has now provisionally concluded that the deal does not raise competition concerns in the UK.

The CMA noted that the merging businesses face "significant competition" from McAfee and a range of other suppliers that currently have a smaller market position in the UK.

The watchdog also found that security applications provided by Microsoft "are increasingly important alternatives for consumers".

"The CMA considers that the merging businesses will continue to face sufficient competition after the deal completes and has provisionally concluded that the merger does not raise competition concerns," it added.

Kirstin Baker, chair of the CMA inquiry group, said: "Millions of people across the UK rely on cyber safety services to keep them safe online.

"After gathering further information from the companies involved and other industry players, we are currently satisfied that this deal won't worsen the options available to consumers. As such, we have provisionally concluded that the deal can go ahead."

The transaction, made up of a combination of cash and new shares, will value LSE-listed Avast at between $8.1bn and $8.6bn.

Avast shareholders will receive $7.61 in cash and 0.0302 of a New NortonLifeLock Share for each Avast share held.

Once the acquisition closes, the combined business will be listed on the Nasdaq exchange and be headquartered in both Tempe, Arizona and Prague in Czech Republic.

In a statement last year, NortonLifeLock CEO Vincent Pilette said the merger will create a business with "compelling strategic scale" with a user base of more than half a billion.

"Our proposed merger with NortonLifeLock is a major step forward… creating a world-leading consumer Cyber Safety business which combines Avast's strength in privacy and NortonLifeLock's strength in identity protection. United, our highly complementary product portfolios will have far-reaching benefits, significantly enhancing our ability to drive innovation through R&D, and accelerating the transformation of our Cyber Safety platform for our more than half a billion combined users."