The Carlyle Group and Symantec have agreed to cut Veritas’s top line purchase price by $600m, as "uncertainties" related to the transaction have come to the fore.
Back in August the Carlyle Group agreed to buy Veritas, Symantec's storage business, for $8.0bn, with Symantec expecting to receive $6.3bn in net cash. That price has been cut to $7.4bn.
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Symantec and Carlyle have also agreed to increase the amount of offshore cash remaining in Veritas from $200m to $400m, which will result in a net consideration to Symantec of $7bn, essentially $6.6bn in cash and a $400m equity interest in Veritas.
We here at El Reg calculate this means Carlyle is effectively paying $800m less for Veritas.
Symantec now expects to receive a billion dollars less – approximately $5.3bn in after-tax cash proceeds and the equity interest in Veritas, compared with the $6.3bn after-tax proceeds under the prior purchase agreement.
So, why the change? The two parties point to “uncertainties developed regarding the transaction". Well, yes, OK, but what uncertainties?
Symantec president and CEO Michael Brown talked about “a difficult environment", in a canned quote. Peter Clare, Carlyle managing director and co-head of US Buyouts, said, “Carlyle remains excited about the long-term value creation opportunity at Veritas,” which is no help in understanding why the Carlyle Group is now paying less for Veritas
However, Symantec is filing with the Securities and Exchange Commission a Form 8-K setting out information regarding the preliminary operating results of Veritas for the third fiscal 2016 quarter, which ended January 1, 2016. That filing is not yet public.
We can only assume that Veritas’s preliminary results show a significant downturn in its revenues for the quarter.
Both Symantec and Carlyle believe that all key conditions to closing have been satisfied and intend to complete the transaction on 29 January, 2016. ®