Takeover talk sends shares in cybersecurity company Avast up 18%

Avast shares rise 18% as cybersecurity firm confirms it’s in takeover talks with US rival met

Avast shares rose nearly a fifth after it confirmed it is in takeover talks with a US rival.

The cybersecurity group FTSE 100 said it was engaged in “advanced” discussions with Norton owner of antivirus software Norton Life Lock, which is considering making a bid for the company.

Avast is just the latest London-listed company to be targeted since the pandemic hit as predators – particularly private equity groups – surrounded the UK market in search of bargains.

Shares up: Cybersecurity firm Avast said it was engaged in ‘advanced’ discussions with Norton antivirus software owner Norton Life Lock, who is considering making an offer for the company

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

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

Shares of Avast shot up 18.1 percent or 91.4 pence to 595.6 pence yesterday, bringing its market cap to £6.1 billion.

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

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

Shares in Arizona-based Norton, on the other hand, fell about 5 percent yesterday.

Avast is a Czech company based in Prague, but declined a Nasdaq listing in favor of London in 2018.

It provides antivirus and ransomware protection to individuals and businesses, with approximately 435 million customers worldwide and 1,700 employees.

Many of the basic products are free. The company claims it blocks more than 4 million ransomware attacks – where criminals hack into a system and then demand payment to unlock it again – and 1.5 billion malware attacks per month.

Norton has not yet made a formal offer and has until August 11 to come up with a proposal if it wants to.

In a statement, the US group said a merger would bring together “aligned visions, highly complementary business profiles and a shared commitment to innovation.”

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

Peel Hunt analysts said that given they believe Avast is “being structurally tested,” a deal “would be positive for Avast shareholders.”

But Danni Hewson, financial analyst at AJ Bell, said: ‘While news of the bid will cause excitement in the near term, the UK’s already very modest tech sector cannot afford to lose one of its leading voters.

“This reveals the broader truth that the current wave of takeover activity could have a material negative effect on the depth, breadth and diversity of the UK stock market.”