NortonLifeLock’s $25bn combination with Avast

We advised NortonLifeLock Inc, a NASDAQ-listed consumer cybersecurity solutions provider, on its $25bn cash and stock merger with Avast plc, a FTSE 100-listed global digital security and privacy company.

The transaction created Gen Digital, a consumer cyber safety organisation with more than 500m users worldwide, including around 40m direct customers. The merger combined NortonLifeLock’s strengths in identity protection with Avast’s expertise in privacy, at a time of rapidly growing demand for consumer cyber safety solutions.

The challenge

The transaction presented a number of legal and regulatory challenges:

• it was an early (and rare) example of a “two offers” structure in a UK takeover, with a default “majority cash” option alongside an alternative “minority shares” offer;
• it required careful navigation of UK and US securities laws, which sometimes conflicted with each other, to allow Avast shareholders to elect to receive a greater proportion of the consideration in either cash or shares; and
• it required extensive engagement with the Takeover Panel and the Financial Conduct Authority (FCA) to ensure that those two regulators took a consistent approach to the UK prospectus requirements.

Our approach

We worked alongside NortonLifeLock’s in-house team to:

• advise on structuring the transaction, and ensure compliance with the Takeover Code and FCA prospectus regime;
• develop a mechanism to implement the flexible consideration structure, addressing the regulatory, security and disclosure requirements this entailed;
• take the lead in drafting the UK prospectus, reducing the burden on the client’s internal team;
• coordinate with counsel in many different jurisdictions across multiple workstreams to deliver a successful transaction; and
• manage the deal’s significant cross-border complexities, including our client being based in the US and the target’s founders in the Czech Republic, in order to keep the timetable on track.

Our strength in UK public M&A transactions, and our ability to coordinate highly complex multi-jurisdictional legal and practical issues, was critical in steering the deal through to a successful conclusion.

The outcome

Following regulatory clearances across multiple jurisdictions, the transaction completed in September 2022, creating Gen Digital, a dual-headquartered company in Prague and Arizona, listed on NASDAQ and focussed on addressing the growing global demand for cyber safety. This transaction demonstrates Macfarlanes’ ability to deliver high-value, complex, cross-border public M&A transactions – particularly advising US (and other overseas) clients on UK takeovers.