Here, we explain why the two antivirus giants likely decided to join forces
In a surprise announcement, antivirus giant Avast released on Thursday that they are acquiring AVG, another leader in the field.
According to the statement to the press, the privately owned Avast will buy up shares of the publicly offered AVG for $25 a pop, leading to a grand total of $1.3 billion. Avast will pay for its new acquisition with a combination of cash in hand and $1.685 billion in committed debt financing from Credit Suisse Securities, Jefferies, and UBS Investment Bank.
As AVG is currently a public company, the deal still faces mountains of regulation and shareholder approval. But this is generally considered to be a formality and the deal is expected to go through as planned.
With the close of the deal, Avast will reportedly now have responsibility for some 400 million endpoints, among which is 160 million mobile devices.
Why the merge and some reasons for concern
News of the deal was greeted with curiosity, leading some to ask why the competing companies — who were both founded in the Czech Republic and are often confused for one another and that might be reason enough — decided that it was time to join forces.
One point worth considering is the general decline in the antivirus market, primarily on desktop where Windows has been adding their own solutions, making the outside providers less relevant. Coming together will help give them a more unified front and resources to soldier on with.
That and Avast’s offer appears from the outside to have been pretty fair and attractive.
While Avast has its own mobile solution, AVG is far and away the leader of the pack in Android security, and will help position Avast in the dominating and lucrative mobile market.
Moving forward, Avast has stated that it “is pursuing this acquisition to gain scale, technological depth and geographical breadth so that the new organization can be in a position to take advantage of emerging growth opportunities in Internet Security as well as organizational efficiencies. The technological depth and geographical reach will help Avast serve customers with more advanced security offerings in the core business and new innovations in emerging markets, such as security for IoT devices.”
The mention of IoT raises questions about how the newly formed company will shape its business model as the Internet of Things starts to play a bigger role in our lives.
While AVG and Avast have premium services, their greatest growth in the market has been as a free product for use on desktop and mobile. Nothing is ever really for free. These apps may provide some protection to the phone, the extent to which is debatable, but most of what they do is collect data on users for ads or other targeting.
Considering it makes a lot of sense to think that should they work their way into the IoT space with our Fitbits and other data goldmines, it is reasonable that Avast sees this as a direction worth pursuing.