Security software giant Avast Software has announced it has agreed to purchase AVG Technologies for $1.3 billion in cash. The companies said in a statement that the acquisition will see Avast pay $25 per share for its Amsterdam-based rival.
Along with its own cash, Avast is using the $1.6 billion in financing it received from Credit Suisse Securities, Jefferies and UBS investment bank to fund the deal.
Both firms were founded in the old Czechoslovakia more than 25 years ago, going on to become two of the biggest names in security software. The companies have a user base of around 400 million between them, which includes the 160 million people who use their mobile products.
Avast said the deal will enable the Prague-based firm to expand its overall reach, both in terms of customers and into new areas such as Internet of Things security. More people are buying household items with connectivity features - even as vulnerabilities in IoT devices continue to be discovered - and Avast doubtlessly wants to take advantage of this burgeoning market.
“Combining the strengths of two great tech companies, both founded in the Czech Republic and with a common culture and mission, will put us in a great position to take advantage of the new opportunities ahead, such as security for the enormous growth in IoT,” said Avast CEO Vince Steckler.
As is often the case with large acquisitions, staff layoffs are expected. “We haven’t started planning the team integration yet. Over the next months we will be analyzing and planning the organizations, but can’t speak to any potential staff reductions until after that,” an Avast spokeswoman told TechCrunch.
The spokeswoman also confirmed that the AVG brand would not be folded into Avast and ultimately disappear. The new company will use both brand names because of their strong associations in different markets.
The boards of both firms have okayed the deal, but it still needs approval from AVG’s shareholders. Avast said it expects the transaction to close between September and October 2016.