17 December 2004 Security behemoth Symantec has confirmed that it will buy software maker Veritas in a $13.5 billion deal.

The combined company will form a security, systems and storage management software powerhouse with around $5 billion (£2.6 billion) in annual revenue.

But markets appeared to have doubts about the deal: Symantec’s shares fell by 8%, as the deal was confirmed. Investors are concerned that Veritas’ projected revenue growth of 10% will drag down Symantec’s expected growth rate of 24%.

But John W. Thompson maintained he was not worried by the drop in value: “There are always going to be short-term dislocations. That will all come back.”

Symatec wants to convince customers that the deal is a natural response to a consolidating software market and customer desires to restrict supplier lists. “Customers are looking to reduce the complexity and cost of managing their IT infrastructure and drive efficiency with fewer suppliers,” said Thompson.

This view was echoed by Galen Schreck of analyst group Forrester Research: “Don’t expect any radical new technology combinations because there are few, if any. This acquisition is about remaining competitive in a consolidating market filled with giants like Cisco, Hewlett-Packard, IBM, and Sun.”

Thompson will continue to operate as chairman and CEO in the merged company which will continue to operate under the Symantec name. Gary L. Bloom, Veritas’ CEO will assume the roles of vice chairman and president.