Avast Shares Spike as U.K. Competition Watchdog Green Lights Merger with U.S. Peer

© Reuters.

By Scott Kanowsky

AiVIF.com -- Shares in Avast PLC (LON:AVST) surged by more than 42% to a record high on Wednesday after the U.K.'s competition watchdog provisionally approved a proposed £6 billion merger between the cybersecurity software provider and U.S. peer NortonLifeLock (NASDAQ:NLOK).

In a statement, the Competition and Markets Authority said its review of the agreement assuaged concerns that the combined company would not have significant corporate challengers.

"After gathering further information from the companies involved and other industry players, we are currently satisfied that this deal won’t worsen the options available to consumers. As such, we have provisionally concluded that the deal can go ahead," said Kirstin Baker, chair of the CMA inquiry group, in a statement.

The CMA, which first opened its probe into the deal in March, cited California-based software firm McAfee as a principal source of competition for Avast and NortonLifeLock. Tech giant Microsoft (NASDAQ:MSFT) will also rival these companies through its Windows operating system, the CMA added.

"In recent years, Microsoft has improved its free built-in security application so that it now offers protection which is as good as many of the products offered by specialist suppliers," the CMA said.

NortonLifeLock said it welcomed the findings, adding that it will continue to work with regulators ahead of the deadline for the publication of the CMA's final report on the merger expected out on September 8.

The Tempe, Arizona-based company plans to now close the deal "as soon as reasonably practicable", targeting September 12 as the first possible date to finalize the tie-up.

The cash-and-stock agreement was first announced in August 2021. The companies were keen to create a large software security player with access to half a billion customers that could keep pace with big tech groups like Google (NASDAQ:GOOGL) and Apple (NASDAQ:AAPL).