Why Symantec Buying Blue Coat Makes Sense

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Managing enterprise security in today’s digital world is becoming increasingly complex with constantly evolving threats.

This gives Chief Information Officers (CIOs) and Chief Information Security Officers (CISOs) a compelling reason to invest in a security partner who is committed to the cause of Enterprise Security and, more importantly, has the resources to invest in Threat R&D and Threat Intelligence.

It’s in this context that Greyhound Research believes that CIOs and CISOs should take note of Symantec’s decision to acquire Blue Coat for USD 4.65 billion. For one, the company will now have 385,000 customers, a vast repository of data sources and over 3,000 researchers and engineers worldwide. Moreover, post this acquisition, Symantec will have USD 4.4 billion in combined revenue (on pro-forma, non-GAAP basis) in FY16. By the end of FY18, Symantec expects to realise USD 550 million in run-rate cost savings. The combined entity will also have access to vast Security and Threat Intelligence data sources.

“Greyhound Research is of the opinion that the Blue Coat acquisition lends Symantec the necessary focus and the resources for it to invest more muscle in research, analysis and generation of a vast amount of Threat Intelligence data. This solidifies Symantec’s competitive stand against other players such as Palo Alto Networks, FireEye, Check Point among others,” said Anshoo Nandwaani, Vice President and Principal Analyst with Greyhound Research.

Per Greyhound Research estimates there are currently nearly 650,000 operational Data Centres across the globe and Symantec will now be managing Security for over 64,000 of these. Effectively, Symantec will now protect over 10% of the world’s Data Centres.

Greyhound Research believes there is ample good news packaged in this latest announcement. Of the many, one that stands out is the decision of Bain Capital, a majority shareholder in Blue Coat, choosing to reinvest USD 750 million in the combined Symantec Blue Coat company. Also, as part of the announcement, technology-focused PE firm Silver Lake has agreed to double its investment in Symantec from USD 500 million to USD 1 billion.

Blue Coat is Symantec’s largest acquisition since July 2005 when it acquired Veritas for USD 13.5 Billion. With enterprises implementing Virtualisation, moving their workloads to the Cloud and launching enterprise-wide Mobility initiatives, they are opening themselves to complex Security threats. This evolved Threat landscape is deeming enterprises to invest in sophisticated Security architectures and focus energies on managing cyber-attacks to ensure control of corporate data at all times.

“Greyhound Research believes Symantec’s decision of investing its corpus funds into the Blue Coat acquisition is directly aimed at solving the need for enterprises to manage such new-age, complex threats. Also, if managed well, this acquisition has the potential to help Symantec meet its goal of scaling up, expand footprint and drive innovation in the global Enterprise Security market,” said Sanchit Vir Gogia, Chief Analyst and CEO of Greyhound Research.

Greyhound Research believes this investment is defining in nature for the global Enterprise Security market.

To know more about why this investment is defining in nature for the global Enterprise Security market and key reasons why it matters to CIOs and CISOs, read our freemium Greyhound Sprint Report titled, 5 Reasons Why Symantec’s Acquisition Of Blue Coat Matters To The CIO’s Office.

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