Takeover talk sends shares in cyber security firm Avast up 18%

Avast shares soar 18% as cyber security firm confirms it is in takeover talks with an American rival

Avast shares soared by almost a fifth after it confirmed it is in takeover talks with an American rival.

The FTSE 100 cyber-security group said it was locked in ‘advanced’ discussions with Norton antivirus software owner Norton Life Lock, which is considering making an offer for the firm.

Avast is just the latest London-listed company to be targeted since the pandemic struck as predators – particularly private equity groups – circle the UK market hunting for bargains.

Shares up: Cyber-security firm Avast said it was locked in ‘advanced’ discussions with Norton antivirus software owner Norton Life Lock, which is considering making an offer for the firm

The AA, Aggreko and even the owner of Butlin’s have been taken private – and firms such as Morrisons and St Modwen Properties have attracted bids in the last few weeks.

A takeover by Nasdaq-listed Norton would also strip London of another heavyweight technology company after the sale of Arm to Japan’s Softbank in 2016 and Imagination Technologies to China’s Canyon Bridge last year.

Avast’s shares rocketed by 18.1 per cent, or 91.4p, to 595.6p yesterday – taking its stock market value to £6.1billion.

Berenberg analysts said Avast could be worth as much as £8.4billion.

Co-founders Eduard Kucera and Pavel Baudis own a 37.5 per cent stake – which rose in value from £1.95billion on Wednesday to £2.3billion last night.

Shares in Arizona-based Norton, in contrast, fell by around 5 per cent yesterday.

Avast is a Czech company based in Prague, but it snubbed a Nasdaq listing in favour of London in 2018.

It offers antivirus and ransomware protection to individuals and businesses, with around 435m customers worldwide and 1,700 employees.

Many of its basic products are free. The firm claims it blocks more than 4m ransomware attacks – in which criminals hack into a system and then ask for payment to unlock it again – and 1.5bn malware attacks each month. 

Norton has not made a formal offer and will have until August 11 to put forward a proposal if it chooses to.

In a statement the US group said a merger would bring together ‘aligned visions, highly complementary business profiles and a joint commitment to innovation’.

Any offer would still need the approval of shareholders and competition regulators.

Peel Hunt analysts said that, given they believe Avast is ‘structurally challenged’, a deal would be ‘a positive for Avast shareholders’.

But Danni Hewson, financial analyst at AJ Bell, said: ‘While news of the bid will generate excitement in the short term, the UK’s already very modest-sized technology sector can ill-afford to lose one of its leading constituents.

‘This reveals the wider truth that the current surge in takeover activity could have a materially negative impact on the depth, breadth and diversity of the UK stock market.’

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