LifeLock Could Be 'Too Good An Opportunity' For Symantec To Pass Up

After market close Monday, Bloomberg reported that Symantec Corporation (NASDAQ: SYMC) may place a bid for Lifelock Inc (NYSE: LOCK) at a valuation of $2 billion. The acquisition makes strategic sense for Symantec, and LifeLock could be “too good of an opportunity to pass up,” Wunderlich’s Bill Choi said in a report.

Analyst Choi maintains a Buy rating on Symantec, with a price target of $30. The rating on LifeLock is also a Buy.

Strategically Important

Symantec was an early investor in LifeLock, purchasing $40 million series D shares in August 2009. Choi added that LifeLock has synergies with Symantec’s Norton Consumer Security business, where the company plans to reaccelerate growth, and the potential acquisition “would immediately achieve that.”

Mentioning that the deal appears appealing from a strategic perspective, the analyst noted that LifeLock had more than 4.4 million subscribers, which could be added to Symantec’s existing consumer base of 65 million and enhance the value of Symantec’s platform “as it looks to expand into identity management.”

Given its $5.6 billion in cash, Symantec would be able to fund the acquisition without new debt. Choi estimated that the deal would be $0.11 in accretion for FY18. He added, “If we assume various levels of cost savings, ranging from 25–45 percent of opex or $117 million–211 million, we calculate $0.24–0.35 in accretion.”

In Tuesday's pre-market session, LifeLock was seen up 3.30 percent at $20.35, while Symantec closed Monday's session at $24.63.