Symantec Corp. is nearing a deal to sell its Veritas data-storage business to Carlyle Group LP for $7 billion to $8 billion, people with knowledge of the matter said.
Symantec, which has been shopping the unit for several months, is still negotiating the terms of a possible transaction, said the people, who asked not to be identified discussing private information. No agreement has been reached and talks could still falter.
Veritas, which Symantec bought in 2005 for more than $13 billion, generates cash flow but has low revenue growth. Shaping it up would require firing employees and shutting down product lines, a person familiar with the situation said in April.
The potential strategic buyers of Veritas dropped out of the process as it became clearer that a private-equity buyer could better afford Symantec’s price while stomaching the months or years of work needed to improve the company’s results, a person with knowledge of the process said.
“We would view a $7.5 billion price tag as a good price,” Daniel Ives, an analyst at FBR Capital Markets & Co., said in a note to clients. “We would welcome a sale versus a split despite negative tax implications, as it would be a major liquidity event for Symantec and add more dry powder to help bulk up its next-generation cyber security.”
Symantec shares rose as much as 1.6 percent in New York. If a deal is completed, it would be the largest solo private-equity takeout of U.S. assets since Blackstone Group LP agreed in 2011 to acquire Centro Properties Group’s U.S. shopping malls for about $9.4 billion, according to data compiled by Bloomberg.
Data-storage in general is a slow-growth business and Symantec’s storage segment reflected those pressures. Revenue in that business for the latest fiscal year, which ended April 3, was up 2 percent to $2.56 billion, and operating income was down 15 percent to $486 million.
Symantec had planned on spinning out the unit as a separately traded company later this year if it couldn’t find a buyer. In October, Symantec said it would split into two divisions, separating its storage and security businesses.
The Mountain View, California-based company has a market capitalization of $15.5 billion based on yesterday’s close in the U.S.
Kristen Batch, a spokeswoman for Symantec, declined to comment, as did Randall Whitestone, a spokesman for Carlyle.