Data security firm Cohesity has spent £5 billion to buy Veritas’ data security business, creating a £10 billion mega-merger.
Reuters revealed the deal, which will see Cohesity take over Veritas’ data protection unit. The unit is valued at over £2 billion, including debt.
Cohesity’s boss, Sanjay Poonen, said the cash and stock acquisition will help the firm boost its growth and profitability and expand into new markets.
He also claimed the merger will create a “profitable growth machine” that will innovate with AI.
However, analysts are not that keen on the deal, which they see as a risky move that could backfire for both firms and their customers.
They pointed out that Cohesity and Veritas have different product lines and customer bases and that integrating them could be a nightmare.
They warned that the deal could spark a price war with Rubrik, one of Cohesity’s main rivals, planning to go public soon.
Veritas, bought by private equity firm Carlyle Group in 2016, will spin off its remaining businesses, such as data compliance and backup services, into a separate company.
Carlyle will keep its stake in the data security unit and join the new company’s board, along with Veritas’ CEO Greg Hughes.
The deal is expected to close by the end of the year.
Sarv Saravanan, chief customer officer at Commvault, a competitor of both Cohesity and Veritas, blasted the deal as a disaster for customers.
He said: “This deal between Cohesity and Veritas could create customer chaos.
“Platform integration challenges and redundant product portfolios could take years to address. With cyberattacks increasing in severity and frequency, there’s no time for that. Customers need to know if they’re hit, they can recover fast. In today’s world, cyber resilience equals business resilience.”
Cohesity’s takeover of Veritas is the latest in a series of blockbuster deals in the tech sector.
In 2023, Broadcom shelled out £45 billion to buy VMware, and Cisco forked out £21 billion to acquire Splunk, an observability platform developer.
