McAfee considering a combination with NortonLifeLock

Consumer-software company has also been approached by private-equity firms

NortonLifeLockInc., the $16 billion consumer-software company, has attracted deal interest from a handful of companies including rival McAfee LLC, people familiar with the matter said.

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Among the options being considered, according to the people, is a combination with the consumer business of McAfee, the antivirus-software company owned by Intel Corp. and private-equity firms TPG and Thoma Bravo LLC.

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McAfee and its owners join Permira and Advent International Corp. as potential suitors for NortonLifeLock. The Wall Street Journal previously reported that those private-equity firms had made a bid for the business.

NortonLifeLock, based in Mountain View, Calif., is the new name for Symantec Corp. since that company closed a $10.7 billion deal to sell its enterprise-security business to Broadcom Inc. in early November. The newly christened company, which had a market value of around $15.8 billion at its closing share price Monday of $25.40, primarily sells Norton antivirus software and LifeLock identity-theft-protection products.

Permira and Advent made an approach before the Broadcom deal closed. They proposed a takeover that would have valued Symantec at $26 to $27 a share and handed them the consumer operation while preserving the sale of the enterprise business to Broadcom, a major chip and software producer. But they failed to reach an agreement before the enterprise sale closed.

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Broadcom had earlier this year considered a deal for all of Symantec and was close to one before the talks fell apart at the last minute. Permira and Advent also previously considered such a deal.

There is no guarantee a deal will be struck this time, and none is likely before the first quarter of next year given that six of NortonLifeLock’s 12 directors, including chairman Daniel Schulman, are planning to leave after the company’s annual meeting Dec. 19.

NortonLifeLock on Nov. 7 named Vincent Pilette as chief executive officer, replacing interim CEO Richard Hill, who left when the Broadcom sale closed. Mr. Pilette and a new independent director are expected to be elected at the annual meeting, paving the way for the new board to discuss alternatives soon after, some of the people said.

McAfee earlier this year was planning a return to the public markets, but the spotty performance of recent technology IPOs has prompted it to more seriously consider other options including an outright sale, some of the people said. Under such a scenario, its enterprise and consumer units could potentially go to different buyers.

Should NortonLifeLock move forward with a deal, it would be one of the largest recent technology takeovers—and potentially one of the largest leveraged buyouts too.

Activist investor Starboard Value LP owns a 7% stake in NortonLifeLock and has a board seat it will retain after the annual meeting. Private-equity firms Bain Capital and Silver Lake also own stakes in NortonLifeLock and will continue to be represented on the board.

Starboard first took a stake in August 2018 and nominated directors to what was then Symantec’s board. At that time, the hedge fund argued that the company needed to make operational changes to improve margins, especially in its enterprise segment. That business was the world’s largest seller of security software for corporate networks, though the consumer operation is more profitable.

Symantec had lost billions of dollars in value following disclosures about unspecified issues with financial reporting raised by a whistleblower and warnings that it wasn’t closing as many deals as expected in its enterprise unit.

In late September 2018, it ended a four-month probe into its accounting practices without major restatements of previous financial results.

Symantec had spent about $7 billion in recent years on two high-profile acquisitions, cloud-security company Blue Coat, and LifeLock, that were met with initial enthusiasm from investors. But those deals did little to jump-start growth, prompting Starboard—and now potential buyers—to get involved.

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Symantec ultimately struck a settlement agreement with Starboard that gave the investor representation on its board. But the company’s problems persisted well into this year. In May, Greg Clark resigned as Symantec’s CEO when the company signaled its results would disappoint.

Write to Cara Lombardo at cara.lombardo@wsj.com, Corrie Driebusch at corrie.driebusch@wsj.com and Miriam Gottfried at Miriam.Gottfried@wsj.com