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Avast to Acquire AVG in $1BN Deal

Avast Software is to acquire anti-virus rival AVG for $1.3 billion to take advantage of emerging growth opportunities in internet security as well as organizational efficiencies.

In an effort to expand its presence in emerging markets, Prague-based Avast will pay $25 per AVG share, and combine the two sets of users to protect a network of more than 400 million endpoints, of which 160 million are mobile. Avast said that this increase in scale will enable it to create more technically advanced personal security and privacy products.

Avast CEO Vincent Steckler said in a statement: “If the AVG shareholders do accept, following the various governmental regulators approvals, AVG will become part of Avast and we will jointly work on a great future together. We expect this to take a few months."

“I do think this combination is great for our users. We will have over 250 million PC/Mac users enabling us to gather even more threat data to improve the protection to our users. In mobile, our combined 160 million mobile users will be used to improve protection as well as to provide an important stepping stone into the Internet of Things. Additionally, we will be gaining some exciting mobile technology designed to protect families online. In SMB, we will be better able to support our business users with a larger geographic footprint, better technical support, and the best technologies from our two companies.”

"We believe that joining forces with Avast, a private company with significant resources, fully supports our growth objectives and represents the best interests of our stockholders," AVG Chief Executive Gary Kovacs said in a statement.

“Our new scale will allow us to accelerate investments in growing markets and continue to focus on providing comprehensive and simple-to-use solutions for consumers and businesses, alike. As the definition of online security continues to shift from being device-centric, to being concerned with devices, data and people, we believe the combined company, with the strengthened value proposition, will emerge as a leader in this growing market.”

Security blogger Graham Cluley, who worked for anti-virus firms Sophos and Dr Solomons, said: "When those early pioneers started writing anti-virus software in their back bedrooms in the late 1980s and early 1990s, they can never have imagined things would grow so big."

Bob Tarzey, analyst and director at Quocirca, told Infosecurity that he had been impressed with AVG’s innovation in Android security, hence the IoT interest from Avast.

“AVG has also extended its services well beyond anti-virus with things like PC Tuneup and developed a user-centric security model,” he said. “I think perhaps Avast saw a quick way to get access to some capabilities it was lacking through acquiring its rival and it could make a bid quite easily as AVG was quoted on NYSE.”

Dominic Trott, research manager of the European Security Practice at IDC, said that he saw the acquisition as a play for scale. “It is getting tougher to make money from traditional endpoint protection, so the ability to generate synergies will help from a cost improvement perspective,” he told Infosecurity.

“More interesting perhaps is the access to more endpoint ‘telemetry’. It is from this kind of insight that endpoint protection players can start to move into emerging/growth areas (notably threat intelligence) to supplement their traditional portfolio areas. The acquisition press release also mentions the opportunity to gain access to a broader geographical profile, which will help to improve the quality of threat intelligence that they would be able to provide.”

Trott also believed that Avast will look to further penetrate the SME market as while neither firm has a particularly well-developed enterprise business, he did not expect this move to unlock the enterprise market in one fell swoop. “However, it will provide them with a renewed/improved basis through which to target this market – particularly if they can re-position themselves as a rising player in threat intelligence” he said.

Asked if they expected to see further market consolidation, Trott said it is eminently possible following the acquisitions of Blue Coat by Symantec, and FireEye’s purchase of iSIGHT and Invotas. “Given the demand/heat in the security market, I would wonder if acquisitions are becoming expensive,” he said.

Tarzey said: “I think the days of standalone anti-virus are over, that is not to say it does not have a place – it does. Sophos, for example, has long been far broader than just anti-virus, so, yes there will be other acquisitions, but not necessarily anti-virus on anti-virus – there needs to be broader appeal than just taking out a competitor.”

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