The Carlyle Group together with Singapore’s sovereign wealth fund GIC signed an agreement to buy Veritas, the information management business of Symantec for $8 billion in cash.
In a statement, Symantec President and CEO Michael Brown said the transaction would strengthen the company’s financial foundation. It would pave the way for the growth of its security business and boost its position as the largest security company worldwide.
“We believe the agreement with the investors, including The Carlyle Group and GIC, delivers an attractive and certain value for the Veritas business, and is in the best interests of all stakeholders,” said Brown.
The board of directors of Symantec unanimously approved the transaction, which is expected to close on January 1, 2016.
Symantec is expecting to receive approximately $6.3 billion in net cash after the closing of the transactions. Its net proceeds would be subject to customary post-closing adjustments.
According to Symantec, it would take a comprehensive and disciplined approach to capital deployment focused on investing in the business and returning capital to shareholders.
The company’s Board approved a $1.5 billion increase to its existing stock buyback program to a total of $2.6 billion. Symantec plans to distribute $2 billion to shareholders over the next 18 months after the completion of the transaction.
Additionally, Symantec would maintain its quarterly cash dividend of $0.15 per share, which represents an overall increase in its dividend payout ratio after separation. The company expects to return approximately 120% of its after-tax domestic cash proceeds from the sale to its shareholders.
According to Symantec, its board of directors explored various strategic alternatives to maximize the value of Veritas. They concluded that the sale Veritas to Carlyle Group and GIC was in the best interest of shareholders.
The all-cash transaction would provide significant proceeds for Symantec to continue its organic and inorganic investments in the security products and services market. It would also provide support to its capital return initiatives.Over the past ten years, the company already returned $10 billion to shareholders.
Symantec Executive Vice President and Veritas General Manager John Gannon said, “Since the Board first announced the separation of Veritas, we have been preparing the company to operate independently and evolving our business strategy, while continuing to deliver industry-leading solutions to our customers. “
Gannon added that Veritas will continue to provide next-generation information management solutions to serve the largest and most complex environments around the world including multiple cloud deployments, managed services, and on-premise infrastructure.
Carlyle Group announced that Bill Coleman will serve as CEO and Bill Krause as Chairman of Veritas following the closing of the transaction.
Carlyle Managing Directors Patrick McCarter and Cam Dyer said, “Veritas is a market innovator with global scale, an iconic brand, and significant growth potential.”
They added that Mr. Coleman is a proven leader, and his strategic vision and strong execution skills leverage Veritas growth as a private and stand-alone company.