NEW YORK: Symantec Corp is revealing the truth about technology mergers and acquisitions (tech M&As). Offloading its data storage and recovery business Veritas  Technologies Corp for US$8 billion (RM32.1 billion) to buyout firm Carlyle Group and Singapore’s GIC Pte Ltd ends a decade-long disaster of a deal.

Like Hewlett-Packard Co, Microsoft Corp and others, Symantec discovered it can be harder to buy than build. The resulting carve-ups and write-downs, though, have a tendency to perpetuate the problem.

The original US$13.5 billion all-stock acquisition of Veritas that Symantec struck back in December 2004 was an unqualified bust. The company botched the integration, hurting sales.

By the time it clawed its way back, the financial crisis hit in 2008.

A new boss then came along with a strategy focused on security, not storage.

Since the deal was announced, Symantec shares have tumbled by almost a third against a 135% rise for the Nasdaq.

Veritas should get a fresh life under new owners. The price tag suggests a whopping 16 times the division’s US$486 million of reported operating income in the year to March 31.

The multiple, though, works out closer to nine times earnings before interest, taxes, depreciation and amortisation after some marketing and other costs are stripped out and left behind at Symantec.

Certain tax breaks will make the deal even cheaper. — Reuters

This article first appeared in digitaledge Daily, on August 14, 2015.