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Symantec acquires identity protection firm LifeLock for $2.3B

In its first move following the Blue Coat Systems merger, Symantec agreed to acquire identity protection firm LifeLock for $2.3 billion to bolster its consumer security business.

Symantec made its first major acquisition of the Blue Coat Systems era with a $2.3 billion acquisition of identity protection firm LifeLock.

The Symantec-LifeLock deal is expected to close in the first quarter of 2017; the antivirus software maker paid $24 a share for LifeLock, which is approximately 16 percent higher than LifeLock's closing stock price of $20.75. Rumors of the acquisition emerged last week with Bloomberg News reporting that Symantec, along with investment firms Permira and TPG Capital, were interested in bidding on LifeLock.

The LifeLock purchase comes just a few months after a major shakeup at Symantec. The security software giant purchased web and cloud security firm Blue Coat Systems for $4.65 billion in June; Blue Coat CEO Greg Clark was named as Symantec's chief executive, filling the voice left by former CEO Michael Brown, who resigned from Symantec in April.

However, the acquisition of LifeLock is a departure from Symantec's recent efforts to chart a new course beyond its legacy antivirus and consumer-focused businesses and focus on new opportunities in cloud security. Following the Blue Coat acquisition, Symantec outlined its "cloud generation" vision, which was carried over from Blue Coat's own strategy to increase its cloud security offerings and combine them with existing web and networking technology.

But in Symantec's second quarter 2017 earnings call earlier this month, Clark stated that although the consumer security business had been in decline, he felt there was still room to grow.

"We believe the market opportunity for protecting consumers is larger than what our current consumer products address today," Clark said. "As we move to further penetrate these opportunities, we expect the Consumer Security business to improve its growth trajectory as we move beyond the PC."

In a conference call Monday, Clark said LifeLock's technology will compliment Symantec's Norton consumer products and expand the scope of consumer security offerings.

"Consumers pay between 2x and 3x more for identify protection than they pay for endpoint malware protection," he said. "With this acquisition Symantec accelerates its Consumer Business' return to growth by offering a digital safety platform to protect information, devices, networks and identities of consumers."

LifeLock, which was founded in 2005, has established itself as one of the leading companies in the consumer identity protection market, but the company ran afoul of the U.S. Federal Trade Commission over the years. In 2010, the company paid $12 million to settle claims that it used false claims to promote its identity theft protection services. Under the 2010 settlement, LifeLock agreed to refrain from making deceptive marketing claims and promised to "take more stringent measures to safeguard the personal information they collect from customers," according to the FTC.

However, in 2015 LifeLock was forced to pay an additional $100 million to settle FTC contempt charges after the agency found that LifeLock had violated aspects of the 2010 settlement. Specifically, the FTC said LifeLock "failed to establish and maintain a comprehensive information security program to protect users' sensitive personal information including their social security, credit card and bank account numbers." In addition, the FTC found that LifeLock continued to engage in false advertising claims and failed to abide by the 2010 settlement's recordkeeping requirements. 

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