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Prague's Avast to acquire Brno's AVG for $1.3 billion

The combined security software company will have 400 million endpoints

Prague-based security software firm Avast Software and AVG Technologies announced July 7 that they have entered into a purchase agreement where Avast will offer to buy all outstanding ordinary shares of AVG for approximately $1.3 billion. Both companies were founded in the Czech Republic in the late 1980s and early 1990s, and expanded internationally in the 2000s. AVG has offices in Brno, South Moravia, but is registered in the Netherlands. Avast is based in Prague.

Avast is pursuing this acquisition to gain scale, technological depth and geographical breadth so it can be in a position to take advantage of emerging growth opportunities in Internet Security as well as organizational efficiencies, Avast said in a news release. The acquisition will help Avast serve customers with more advanced security offerings in the core business and new innovations in emerging markets.

This transaction has been unanimously approved by the management board and supervisory board of Avast. The management board and supervisory board of AVG approved the transaction and recommended the offer for acceptance to AVG shareholders.

“We are in a rapidly changing industry, and this acquisition gives us the breadth and technological depth to be the security provider of choice for our current and future customers,” Vince Steckler, chief executive officer of Avast Software, said in the news release.

“Combining the strengths of two great tech companies, both founded in the Czech Republic and with a common culture and mission, will put us in a great position to take advantage of the new opportunities ahead, such as security for the enormous growth in IoT,” he added,

Avast will now have a network of more than 400 million endpoints, of which 160 million are mobile, that act as de facto sensors, providing information about malware to help detect new threats as soon as they appear. This increase in scale will enable Avast to create more technically advanced personal security and privacy products.

“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,” said Gary Kovacs, chief executive officer, AVG. “Our new scale will allow us to accelerate investments in growing markets and continue to focus on providing comprehensive and simple-to-use solutions for consumers and businesses, alike. 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 transaction is an all-cash tender offer for all outstanding ordinary shares of AVG at a price of $25.00 per share.  Avast plans to finance the transaction using cash balances on hand and committed debt financing from third party lenders.  Avast has received a financing commitment of $1.685 billion from Credit Suisse Securities, Jefferies and UBS Investment Bank. In addition, Avast has contributed  $150 million in equity investment to fund the transaction. The proposed transaction is not subject to a financing condition.

The offer price represents a 33 percent premium over the July 6, 2016, closing price and a premium of 32 percent over the average volume weighted price per share over the past six months.  The contemplated tender offer will be subject to certain shareholder approvals and regulatory clearances.

Jefferies International Limited is acting as exclusive financial advisor, and White & Case LLP and De Brauw Blackstone Westbroek N.V. are acting as legal advisors, to Avast. Morgan Stanley & Co. LLC is acting as financial advisor to AVG and Bridge Street Securities, LLC is acting as independent financial advisor to the supervisory board of AVG. Orrick, Herrington & Sutcliffe LLP and Allen & Overy LLP are acting as legal advisors to AVG.

Avast Software, maker of mobile and PC security, protects 230 million people and businesses with its security applications. In business for over 25 years, Avast is one of the early innovators in the security business, with a portfolio that includes security and privacy products for PC, Mac, Android and iOS, and premium suites and services for business.

AVG is a leading provider of software services to secure devices, data and people. AVG’s consumer portfolio includes internet security, performance optimization, location services, data controls and insights, and privacy and identity protection, for mobile devices and desktops. The AVG Business portfolio, delivered through a global partner network, provides cloud security and remote monitoring and management (RMM) solutions that protect small and medium businesses around the world. - Prague, 08.07.2016 


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