Symantec Snaps Up Blue Coat For $4.65 Billion

**Editor’s Note: Please click here for a recap of the biggest channel-impacting mergers in March-April 2016.**

Less than two weeks after saying it would pursue an IPO, Blue Coat on Monday announced that it will be acquired by Symantec for about $4.65 billion in cash, with the transaction expected to close in the third quarter.

Equity firms Bain Capital and Silver Lake will invest $500 million and $750 million, respectively, to help close the deal, and Blue Coat CEO Greg Clark will lead the combined company under the Symantec name. The Blue Coat executive team will also join Symantec, and executives said they expect to keep the core sales-force teams intact.

Symantec has been pursuing a strategy to compete with more nimble security startups: In August it sold Veritas; in April it relieved CEO Michael Brown of command; and then, in May, it announced a “go lean” strategy with layoffs of some 1,200 employees. By purchasing Blue Coat, it aims to strengthen its web and cloud product sets.

There’s little overlap in Symantec’s portfolio for Blue Coat’s web and cloud security products. There was also little mention of the channel in a call held this morning for analysts, though the companies did stress cross-selling opportunities between Symantec’s 370,000 and Blue Coat’s 15,000 customers, including potential for increased wallet share among the top 1000 customers, the prospect of cross-selling Blue Coat web security beyond the Fortune 1000 and complimentary Fortune 500 customer relationships. {ad}

“It’s a logical move but not particularly innovative,” said Paul Cronin, senior vice president of Atrion. “We made a decision not to sell Symantec products to our customers, and this probably won’t change that.”

Atrion is a long-term Blue Coat partner, and Cronin says the current assumption in security is that bigger is better. Scale can be an advantage for security companies — if they successfully combine core protection engines and share threat data and expensive engineering talent. In this case, an expanded product portfolio will offer more for current partners to sell and may even attract new business.

“Any move like this introduces some risk,” says Cronin. “We will wait and see — we don’t have a choice, we’ve already implemented Blue Coat solutions across our client base.”

He says if Symantec is smart, it will …

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… learn from Blue Coat’s channel strategy, which gives partners a chance to stand out by demonstrating expertise and commitment.

Cronin’s comment on scale is echoed by Ajei Gopal, Symantec’s interim president and COO, who points out that Symantec collects and analyzes security data from sources, including more than 175 million endpoints protected through Symantec Endpoint Protection and over 2 billion emails scanned per day through Symantec’s Email Cloud.

Blue Coat brings insight into some 1.2 billion new web requests per day through its Secure Web Gateway and 12,000 cloud applications monitored and protected through its Cloud Access Security Broker.

“Symantec and Blue Coat collect different and complementary data sets,” said Gopal on an analyst call. “Taken together, we will have unmatched visibility into data about the global threat landscape. We believe combining these two massive data sets enables Symantec to deliver unparalleled cyber defense.”

Gopal says the acquisition will result in a unified solution set that includes user authentication, cloud gateway, cloud sandboxing, app discovery, data loss prevention, a cloud access broker and cloud analytics with more than 3,000 R&D engineers and researchers.

Clark reiterated Blue Coat’s focus on web security, saying it leads the market with 43 percent share and more than 15,000 customers, including 70 percent of the global Fortune 500. The company has added over 700 net new customers over the past 12 month, according to Clark, with a 95 percent retention rate.

“While product innovation is first and foremost, as you can see from our track record at Blue Coat, we know how to efficiently grow revenue at scale, while maintaining industry leading profitability,” said Clark.

Cronin says it’s encouraging that Clark will lead the combined company because Atrion has been pleased with Blue Coat’s channel strategy. “They know how to treat partners,” says Cronin.

Agree? Disagree? Let me know, either in comments or direct. Follow editor in chief @LornaGarey on Twitter.