Carbonite Buys Webroot for $618M to Offer Security with a Safety Net

Xconomy Boston — 

Data backup and storage company Carbonite has bought endpoint cybersecurity provider Webroot in a $618 million deal designed to stitch both together into an A.I.-powered automated cloud security software for devices, with built-in emergency backup.

Carbonite CEO Mohamad Ali told investors on a conference call, a little over an hour after the deal was announced, that combining Carbonite’s cloud backup service with Webroot’s ability to track malware and intrusion attempts on users’ devices would be a game-changer.

“Imagine a product that not only secures your endpoints, but if something gets through, automatically recovers it by going back to an older version of your environment or an older version of an infected file. Nobody does this today,” Ali said. “We have the opportunity to create a whole new way of securing and recovering.”

Carbonite is using cash on hand and a $550 million loan from Barclays, Citizens Bank, and RBC Capital Markets to pay for the acquisition, its latest since buying Mozy from Dell Technologies in 2018 for $145 million.

Sizing up what each company has to offer the other in terms of cost-reductions and sales synergies, Carbonite estimates $50 million in opportunities to sell to one another’s customers and $20 million in cost savings.

Webroot, founded in 1997 and located in Broomfield, CO, has about 600 employees and recorded $215 million in sales for the year ending June 30. Carbonite (NASDAQ: CARB), founded in 2005 and located in Boston, has almost 1,000 employees and booked $296.4 million in sales and $7.6 million in net income for 2018.

Ali said it was the automation that Webroot built into its endpoint cybersecurity tool that set it apart. Most tools out on the market do a fine job of monitoring devices on a business network for intrusions, but they respond with alerts that require human monitoring instead of taking the next recovery steps themselves.

“If you’re CitiBank, you have somebody watch those alerts,” Ali said. “If you’re a small business, you can’t.”

Another appealing aspect was the similarity between the two companies, according to Norman Guadagno, senior vice president of marketing for Carbonite. Both were designed for the cloud; both understood the vulnerabilities of endpoints, like computers and other devices.

“It was sort of like we were siblings from different parents,” Guadagno told Xconomy in an interview. “It seemed like there was a natural affinity there.”

Guadagno said a desire shared by many customers to reduce the number of technology vendors they work with—for security, for backup, for other services—also drives the thinking behind the deal.

“If you are buyer of tech, frankly the choices can be overwhelming,” Guadagno said. “I get 10 to 20 emails and phone calls a day from tech vendors, each selling me something else. I’m always looking for opportunities to streamline.”

Carbonite expects the deal to close by the end of March and predicts the combination will immediately start to boost the combined companies’ earnings.