Cyber scammers are becoming more like pirates since the pandemic forced them to live online. Increasing threats are driving demand for protection and breathing new life into mature consumer security groups.
NortonLifeLock (formerly known as Symantec), which once lags behind the United States, is in the midst of a breeze in sales. Look British listed Avast. The details are scarce, but the expected offer raised Avast’s stake by 15%, bringing the group’s valuation to about $9 billion.
Trading at that premium is not impressive. The Biggest Cybersecurity Deal Ever – Thoma Bravo’s $12.3 billion purchase of Proofpoint – Collected over 30% premium in April. Even if consumer cybersecurity grows slower than its peers, Avast is still leading the horde of peers.
The group pioneered the “freemium” antivirus model and gained a user base of 435 million. Its audience is proficient in cheap cross-selling and should bring significant cost savings to any buyer. This suggests that NortonLifeLock needs to give up more money if it wants to acquire Avast shareholders.
Avast’s model was tested last year when it became clear that private user data had been published. However, the impact on earnings proved to be minimal, and those losses quickly reversed.
However, Avast’s stock price has fallen this year. Prices have fallen 5% due to a backlash from peers. NortonLifeLock rose 30% and recently relisted McAfee rose 40%.
This profit allowed the two companies to partially close the valuation gap with Avast, which was trading at eight times the futures sales. The current 9 Avast transactions are significantly more premium than NortonLifeLock’s 7 transactions.
Still, cost savings will probably come from reducing Avast’s marketing costs. Last year’s sales were 14%, compared to more than 20% for NortonLifeLock. Berenberg believes the difference will save $250 million annually.
These taxed and capitalized companies alone have an additional 8% legitimacy in addition to Avast’s current share price. Avast’s international customer base also offers cross-selling opportunities. Shareholders can plan higher courses on stocks.