Symantec's restructuring had split it into three parts: the information management division, Veritas Technologies, was sold to the private equity fund Carlyle; the enterprise security division was sold to Broadcom ; while the consumer division, owner of famous franchises such as Norton, LifeLock, Avira and CCleaner, remained independently listed under the name NortonLifeLock.
Following its merger with Avast in autumn 2022, the company was renamed Gen Digital. Subsequently, its stock regularly topped the screeners on US markets, mainly due to valuation multiples much lower than its software peers, while its margins approached those of Microsoft.
The situation was therefore somewhat puzzling. In reality, investors probably had some reservations about the very particular - and somewhat predatory - business model of consumer antivirus distributors. In addition, the critical issue is the group's considerable indebtedness - around $8 billion in net debt, compared with free cash flow expected to reach $1 billion this year - since the purchase of Avast.
This acquisition was made at around x10 times the Czech company's sales. It is noteworthy that Gen Digital is currently valued at x6 its sales. Even so, this valuation has largely recovered, since until recently it was in the region of x4 sales and x11 free cash flow.
Although considerable, debt is well broken down, with mainly $4.5 billion maturing in 2028. Barring a sharp downturn in its business, Gen Digital is unlikely to have any difficulty in honoring or refinancing this debt. However, more than half of the debt is at variable rates.