Symantec to buy Blue Coat Systems for $4.65bn - but is it wildly overpaying?

Bain Capital doubles its money after owning Blue Coat for just 13 months

Symantec is to acquire Blue Coat Systems from private equity firm Bain Capital for $4.65bn in a bid to flesh out its corporate anti-malware product line-up. The deal comes just 13 months after Bain completed the acquisition of the company for $2.4bn - almost doubling its money in just over a year.

Symantec will combine its firewall and "threat telemetry" offerings with Blue Coat's network and cloud security offerings, in theory expanding the scope of protection that the combined company can offer. The purchase will also expand Symantec's research and development division to more than 3,000 engineers and researchers, and nine threat response centres.

Symantec chairman Dan Schulman said that the acquisition will help the company offer security products aimed at both cloud computing and mobile. "With this transaction, we will have the scale, portfolio and resources necessary to usher in a new era of innovation designed to help protect large customers and individual consumers against insider threats and sophisticated cyber criminals," he said.

He continued: "Together, we will be best positioned to address the ever-evolving threat landscape, the massive changes introduced by the shift to mobile and cloud, and the challenges created by regulatory and privacy concerns."

Blue Coat was expected to go public earlier this month, but its private equity owner Bain could scarcely turn down the generous offer from Symantec.

The deal will also provide Symantec with a new chief executive, with Blue Coat CEO Greg Clark taking over at Symantec as part of the deal. "I am very excited about the opportunity to join Symantec as CEO and look forward to working with the strongest, deepest team in security to realise the many strategic and financial benefits this transaction will create," he said.

However, Blue Coat also has a chequered reputation in some quarters. Press freedom group Reporters Without Borders, for example, named Blue Coat as one of five ‘Corporate Enemies of the Internet' in March 2013. It claims that the company's technology is deployed in places like Burma and Syria to "intercept and analyse encrypted traffic".

Blue Coat claims that the appearance of its technology in such places was the result of a Dubai distributor independently selling the devices, which are not supported by Blue Coat.

The deal comes just over a year after Bain acquired Blue Coat from private equity tech specialist Thoma Bravo, which acquired Blue Coat for $1.3bn in December 2011, before off-loading it to Bain in May last year for $2.4bn.

The purchase by Symantec therefore raises many questions over tech valuations and whether either Thoma Bravo undersold the company or Symantec is grossly overpaying.

For Symantec, meanwhile, the acquisition is an attempt to reverse the company's waning fortunes. It offloaded its Veritas information management division in August 2015 for $8bn, which followed on from a split into separate security and information firms in 2014 to create more focused operations.