Bain Capital has sold web security company Blue Coat to Symantec and has agreed to reinvest $750 million in the newly-combined company upon closing of the acquisition, according to a statement from Symantec.
Bain Capital acquired Blue Coat from Thoma Bravo in 2015 in an all cash transaction valued at $2.4 billion. The firm had been looking for exit opportunities for Blue Coat through an initial public offering until the offer from Symantec came along to acquire the company. The merger creates one of the largest web security companies, according to a source familiar with the matter.
Bain Capital still believes in the potential of Blue Coat and never intended to fully exit the company, according to the source. The firm will reinvest in Blue Coat following Symantec's acquisition of the company for approximately $4.65 billion in cash as it has agreed to make an investment of $750 million in its convertible notes. The convertible notes are noncallable and unsecured, and have an initial conversion price of approximately $20.41 per share, according to the statement.
In connection with the transaction, private equity firm Silver Lake has also agreed to make an additional investment of $500 million in 2 percent convertible notes due 2021 of Symantec, doubling its investment in Symantec to $1 billion. The firm first invested in the company's convertibles in February.
Bain Capital will be investing out of its eleventh fund, Bain Capital Fund XI, according to a source familiar with the matter. Fund XI held a final close on $7.3 billion, above its $6 billion target in 2014.
The buyout, corporate private equity fund invests in diversified sectors in North America, Western Europe, Asia-Pacific, Central and Eastern Europe, Latin America, Middle East and Africa.
Silver Lake will be investing from its fourth fund Silver Lake Partners IV, according to another source familiar with the matter. The 2012 vintage vehicle held a close on $10.3 billion above its $7.5 billion target. The buyout corporate private equity fund invests in technology media and telecommunications globally. Fund IV had an investment multiple of 1.3x and a net IRR of 36.8 percent, as of September 2015, according to California Public Employees Retirement System (CalPERS).
Following the investment, David Humphrey, a managing director of Bain Capital, will be appointed to Symantec's board of directors. Greg Clark, chief executive officer of Blue Coat, who has been with the company since 2011, will be appointed CEO of Symantec and join the Symantec board. Both appointments will become effective upon closing of the transaction in the third quarter, according to the statement.
Symantec intends to finance the transaction with cash on the balance sheet and $2.8 billion of new debt. The company is focused on paying down a significant portion of this debt within the next several years with cash on the balance sheet and through cash generation.
Bain Capital, founded in 1984, has $75 billion assets under management. The firm specialises in private equity, venture capital, credit products and absolute return investments.
Silver Lake, founded in 1999, has $24 billion assets under management. The firm invests in large-cap technology companies and tech-enabled businesses.