Avast Acquires AVG for $1.3B as Antivirus Industry Consolidates

NEWS ANALYSIS: The deal combines two popular consumer antivirus vendors, but what does it say about the state of the industry overall?


Two well-known vendors in the consumer antivirus space are coming together, as Avast has announced it is acquiring rival AVG Technologies for $1.3 billion. When the deal closes, the combined company will be protecting more than 400 million endpoints around the world.

Under the terms of the deal, privately held Avast will pay $25 for each share of AVG, which is a 33 percent premium over the July 6, 2016, closing price. The deal is expected to close between Sept. 15 and Oct. 15, 2016.

There are a lot of similarities between Avast and AVG. For one, both companies have their roots in the Czech Republic. AVG was founded in 1991 and has since moved its headquarters to Amsterdam, Netherlands, while Avast was founded in 1988 and is still based in the Czech Republic. Both companies also offer free consumer antivirus products with paid upgrades for additional security capabilities. As well, they both have increasingly made a move to protect mobile devices.

The similarities between AVG and Avast have also led to a fair bit of confusion in the market. Some of the confusion stems from the fact that the names of both companies start with the letters "AV," Avast's CEO Vincent Steckler pointed out in a blog post announcing the deal. He recounted an incident when he first became CEO of Avast, in which an individual who watched him do a presentation on Avast later complemented him on how much he liked learning about AVG.

"These companies are so similar that it is only natural that they be combined and that is what we are now planning on doing," Steckler wrote.

AVG's leadership is also optimistic about the acquisition.

Gary Kovacs has been the CEO of AVG since 2013, previously serving as the CEO of Mozilla. "We believe that joining forces with Avast, a private company with significant resources, fully supports our growth objectives and represents the best interests of our stockholders," Kovacs said in a statement. "As the definition of online security continues to shift from being device-centric, to being concerned with devices, data and people, we believe the combined company, with the strengthened value proposition, will emerge as a leader in this growing market."

The bottom line is that the security market in 2016 is very different than it was in 1991. It's painfully obvious that signature-based antivirus technology alone isn't effective at combating modern threats. Modern malware is easily modifiable by hackers to avoid signature-based detection, which is why more advanced approaches, including behavior-based technologies, are becoming increasingly popular. What's also clear is that desktop computing, while still important, isn't a growth market.

Both AVG and Avast in recent years have emphasized that they are no longer just signature-based technologies. Both vendors have also moved beyond just the desktop, and both are now more than just consumer technology too. Back in February 2015, Avast announced a free business edition, bringing a zero-cost entry-level security technology to market. AVG also has a business edition, though only the 30-day trial is free.

The combined Avast-AVG company will no doubt continue the free model for consumer antivirus as an entry point. I have seen Avast and AVG on many systems, and the reason is almost always because it starts off free. While traditional signature-based antivirus technology isn't as effective as it once was, there is still a need and a vast market for the next generation of antivirus security technologies that the combined Avast-AVG will offer.

Sean Michael Kerner is a senior editor at eWEEK and InternetNews.com. Follow him on Twitter @TechJournalist.

Sean Michael Kerner

Sean Michael Kerner

Sean Michael Kerner is an Internet consultant, strategist, and contributor to several leading IT business web sites.