Symantec's (SYMC) Blue Coat Deal Looks Tentatively Good, but Some Risks Remain - BTIG

BTIG affirms Symantec (NASDAQ: SYMC) with a Neutral rating after the company announced entering an agreement to acquire Blue Coat for about $4.65 billion.

Analyst Joel Fishbein commented Monday: The deal brings immediate benefits for SYMC: 1) increased enterprise security exposure, as pro forma enterprise security revenues increase to 62% of the base (vs. ~54% as of F16); 2) better focus on highergrowth security segments (Gartner estimates that 85% of large enterprises will be using cloud access security brokers, vs. <5% today); 3) significant accretion, as FY18 EPS is expected to jump to $1.70-$1.80 vs. $1.37 prior (+28%); and 4) a new CEO in Greg Clark with a deep software background and proven track record of turning around and growing an enterprise-focused security company.

At the surface, the transformative deal looks like a good one. However, there are obvious risks around a transaction of this size, notably the product and sales integration required, and if this can truly position SYMC to achieve its goal of being the leading enterprise cyber security company.

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