FireEye Inc (NASDAQ: FEYE) shares tanked about 10% on Thursday morning as the cybersecurity firm announced a definitive agreement with Symphony Tech-led investor group to sell its Products business for $1.2 billion in cash before transaction-related costs and taxes.
The transaction is expected to close in Q4 of 2021
FireEye’s Products business include network, email and cloud security products, which will be separated from its cyber forensics unit, Mandiant Solutions, upon completion of the transaction that is expected in Q4 of 2021.
The California-based company had acquired Mandiant in 2014 for roughly $1 billion. Its agreement with a consortium led by Symphony Technology Group (STG) will establish Mandiant again as an independent, publicly-traded company.
According to CFO Frank Verdecanna of FireEye, the existing staff will be divided almost equally between Mandiant and STG. FireEye named Goldman Sachs as its financial advisor for the deal and Wilson Sonsini Goodrich & Rosati as its legal advisor. STG, on the other hand, picked Jefferies and UBS Investment Bank as its financial advisors and Paul Hastings as its legal advisor.
In separate news from the United States, Meredith Corp accepted a revised bid ($16.99 per share) from Gray Television for its local media group.
FireEye’s board approves $500 million of share repurchase
Commenting on the news, CEO Kevin Mandia of FireEye said in an interview with Reuters:
“We believe this separation will unlock our high-growth Mandiant Solutions business and allow both organizations to better serve customers. After closing, we will be able to concentrate exclusively on scaling our intelligence and frontline expertise through the Mandiant Advantage platform, while the FireEye Products business will be able to prioritize investment on its cloud-first security product portfolio. STG’s focus on fuelling innovative market leaders in software and cybersecurity makes them an ideal partner for FireEye Products. We look forward to our relationship and collaboration on threat intelligence and expertise.”
FireEye also highlighted that its board had given the green signal for up to $500 million of share repurchase. Shares of the company opened at $20.37 in the stock market on Thursday and are currently exchanging hands at $19.33. In comparison, FireEye had started the year 2021 at a per-share price of $21.86.
FireEye performed largely upbeat in the stock market last year with an annual gain of about 30%. At the time of writing, the Nasdaq-listed firm has a market cap of $4.60 billion.
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