LONDON -London-listed cybersecurity firm Avast is in advanced talks with U.S. rival NortonLifeLock Inc about a merger that would create a clear leader in consumer security software.
Both companies confirmed the talks late on Wednesday, with Avast saying an offer would be in cash and shares, although it added there was no certainty a deal will be agreed.
Avast, which was founded and based in Prague, Czech Republic, is a pioneer of "freemium" software, whereby basic applications are free and subscribers pay for premium features.
Its Avast and AVG branded desktop and mobile software had more than 435 million active users at the end of 2020, of which 16.5 million are paying.
The shift to home working during COVID-19 spurred demand for its desktop products like antivirus software, and it recorded 7.1% organic growth in adjusted billings to $922 million last year.
Shares in Avast, which listed in London in 2018, were trading up 13% at 570 pence at 0856 GMT, giving the company a market capitalisation of 5.87 billion pounds ($8.11 billion), according to Refinitiv data.
The company's founders, Pavel Baudis and Eduard Kucera, own a combined 35%.
The Wall Street Journal, which first reported the talks, said a deal could value Avast at more than $8 billion.
Analysts at Berenberg, however, said "nothing short of a $10 billion valuation is fair to Avast's shareholders".
A spate of cyber attacks had propelled valuations, they said, and with private equity and large enterprises attempting to outbid each other, deal premiums had gone up as well.
Tempe, Arizona-based NortonLifeLock, said a deal would bring together "two companies with aligned visions".
NortonLifeLock was previously known as Symantec Corp, before it sold its enterprise-security business to Broadcom in 2019.
It currently sells Norton antivirus software and LifeLock identity-theft-protection products for home and work use.
Under UK takeover rules, it has until August 11 to make a firm offer for Avast.
($1 = 0.7236 pounds)
