The reaction to Symantec’s proposed $13bn acquisition of Veritas was bad enough: Symantec’s shares were trading at around $33 before the deal was announced on December 16, but fell to just over $25 in early January, prompting Symantec CEO, John Thompson to state: "I don’t understand the haircut we got, I just don’t." The shares have subsequently dropped further, closing at $24.51 on January 14.
But yesterday even specialist storage analysis firm Taneja Group senior analyst, Alex Gorbansky, told me he is "negative" on the deal. Gorbansky said that his overwhelming feeling on the deal is "negative", saying that the acquisition does not hold the potential for strong synergies for either company. While he said that he does "not feel [he has] sufficient data yet to fully understand the long-term impact of the deal", he said also that he does "not instinctively understand the synergies".
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He’s not the only one. A number of brokers cut their assessments of Symantec’s potential stock performance on the announcement of the acquisition, while Credit Suisse First Boston offered a critical view of the merger plan: "Although Symantec will possess a much broader product portfolio when merged with Veritas, we are concerned that the combined product set in its present status does not form a truly holistic infrastructure management solution that offers comprehensive visibility across the IT infrastructure which could provide cross-selling leverage and increase growth rates for both companies’ core businesses, but rather more closely represents an amalgamation of a larger collection of point product functionalities that will continue to be sold to stovepipe operational segments of enterprise IT departments," the broker said.
CBR’s own storage specialist Tim Stammers is equally bemused by the deal, saying that, "It’s like a tire maker merging with a seat belt manufacturer and saying both are involved in road safety." Given the reaction the deal has had so far, Symantec’s Thompson had better have his seat belt fastened securely.
