Cohesity and Veritas’ Data Protection Business to Combine, Forming a New Leader in AI-Powered Data Security and Management

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Cohesity, a leader in AI powered data security and management, and Veritas, a leader in secure multicloud data  resilience, are announcing their definitive agreement under which Cohesity intends to  combine with Veritas’ data protection business, which will be carved out of Veritas, to create a  new leader in data security and management. Customers will benefit from the accelerated  innovations unlocked by the joint company’s scaled R&D investment, its unwavering support for  customer success, and one of the industry’s most extensive partner ecosystems.  

Sanjay Poonen will lead the combined organization as CEO and President. Greg Hughes, CEO  of Veritas, will serve as a Board member and strategic advisor to Sanjay Poonen after the close  of the transaction. 

Protecting the world’s data and gaining insights from that data are top imperatives for IT  practitioners all the way to board members. Given the rampant threat of ransomware, every  organization needs a cyber resilience strategy. Furthermore, technology and business  executives now have a unique opportunity to leverage the power of generative AI for data-driven  insights to unleash new levels of efficiency, innovation, and growth.  

The combined innovations of Cohesity and Veritas will address these challenges directly,  offering organizations a comprehensive, multicloud data protection portfolio with a powerful,  simple user experience, and a high-performance, centrally-managed hyperconverged platform.  This highly complementary combination will create a new leader in data security and  management with numerous product offerings to help customers address their needs for data  security and data insights. The combined company will bring together 100s of exabytes of data  protected, a global go-to-market footprint, high penetration in the enterprise with 96 of the  Fortune 100 and 80% of the Global 500, and a strong partner ecosystem across all segments of  cloud service providers, security players, VARs, system integrators, and hardware OEMs. 

The combined company will continue to invest in and advance the roadmap and strategy of all  Cohesity products and services, as well as Veritas NetBackup, NetBackup appliances, and Alta  data protection offerings, while working towards the delivery of an integrated solution combining  the best technology across the two companies. 

“We are deeply committed to our mission to protect the world’s data. This deal will combine  Cohesity’s speed and innovation with Veritas’ global presence and installed base. We will lead  the next era of AI-powered data security and management by bringing together the best of both  product portfolios – Cohesity’s scale-out architecture ideally suited for modern workloads and  strong Generative AI and security capabilities and Veritas’ broad workload support and  significant global footprint, particularly in the Global 500 and large public sector agencies,” said  Sanjay Poonen, President and CEO of Cohesity. “This combination will be a win-win for our  collective 10,000 customers and 3,000 partners, and I can’t wait to work with the Veritas team to  bring our vision to life.” 

Greg Hughes, CEO of Veritas, stated, “Veritas and Cohesity share a common vision of  empowering businesses to protect their critical data assets in the face of evolving cyber threats  and complex hybrid cloud environments. Bringing Veritas’ differentiated cloud-native  architecture to Cohesity’s strong innovation engine will ideally position us to offer our customers  transformative solutions against cyber attacks while delivering the flexibility and scalability  required to thrive in the multicloud era.”  

“Both companies have high Net Promoter Scores and share a steadfast, long-term commitment  to customers. Existing products will continue to be supported for many years while leveraging  joint best-of-breed technologies to provide the most innovative roadmap for a future that delights  customers,” Poonen continued. “We are deeply committed to both Cohesity and Veritas  customers, partners, and employees as we accelerate customer-driven innovation as one  company.” 

“I believe customers could benefit from the combination of Cohesity’s simple and secure, high performance platform and AI-enabled data insights together with Veritas’ global footprint and  cloud-native capabilities,” said Patrick Moorhead, Founder, CEO, and Chief Analyst at Moor  Insights and Strategy. “The combined company will benefit from scaled R&D efforts and  industry-leading capabilities to help make customers more secure and offer them advanced  capabilities in data management and insights.”  

Together, the companies will target a total addressable market (TAM) of over $30 billion. This  figure includes the data replication and protection software market, estimated to be $12.2 billion  in 2024 by IDC. The expanded go-to-market breadth, geographic footprint, and R&D resources  will allow the combined company to accelerate new customer adoption and help drive the  deployment of innovative solutions within the fast-growing data security and management  segment.  

The combination will provide compelling benefits for customers, with increased resources to  invest in technology innovation while simultaneously adding scale to support customers  worldwide. On a pro forma basis for the fiscal year ending July 2023, the combined entity had  revenues of over $1.6 billion, annual recurring revenue (ARR) of $1.3 billion, and a 27 percent  adjusted cash EBITDA margin. Further, the combination will augment long-term growth with  incremental product and geographic expansion opportunities, ensuring customers can access  best-in-class tools and services to safeguard their data. 

Transaction Details 

The transaction has been unanimously approved by each of Cohesity’s and Veritas’ boards of  directors and is expected to close by the end of 2024, subject to regulatory approval and other  customary closing conditions. Cohesity will finance the transaction through a combination of  equity and debt. The transaction values the combined company at approximately $7 billion. In  connection with the transaction, Veritas expects to commence exchange offers or similar  transactions in connection with its existing debt. 

The combined company will receive support from current marquee investors, including Softbank  Vision Fund, Sequoia Capital, Wing Venture Capital, Premji Invest, and others. Existing Veritas  shareholders, including majority owner Carlyle, will become Cohesity shareholders upon the  closing of the transaction. Patrick McCarter, Managing Director and Co-Head of Global  Technology at Carlyle, will join the Cohesity Board of Directors after the close of the transaction. Haveli Investments will participate as a new significant investor as part of this transaction, and  Premji Invest will increase its holdings in Cohesity. In addition, Madrona will become a new  investor in the combined company. In conjunction with these investments, Brian Sheth, Founder  and CIO of Haveli Investments, will join Cohesity’s Board of Directors upon the close of the  transaction, and Sandesh Patnam, Managing Partner of Premji Invest, will join the Cohesity  Board of Directors later this month. This robust backing ensures the financial and operating  resources essential for propelling the company’s growth, extending its global presence, and  driving continued product innovation. 

The remaining assets of Veritas’ businesses will form a separate company, “DataCo.” “DataCo”  will comprise Veritas’ InfoScale, Data Compliance, and Backup Exec businesses, and will  function autonomously, enhancing agility and adaptability. This newfound independence will  enable these businesses to implement a sharply focused, customer-centric approach. Each  entity will have dedicated research and development efforts, aiming to deliver specialized  solutions tailored precisely to their respective markets. “DataCo” will be led by CEO Lawrence  Wong, currently Senior Vice President of Strategy and Products at Veritas. 

Advisors 

J.P. Morgan Securities LLC served as Cohesity’s exclusive M&A financial advisor, and  JPMorgan Chase Bank, N.A. has provided committed financing for the transaction. PJT  Partners served as debt capital markets advisor to Cohesity. Simpson Thacher and Bartlett LLP  and Gunderson Dettmer LLP served as primary legal advisors to Cohesity. Guggenheim 

Securities, LLC and Morgan Stanley & Co. LLC served as Veritas’ financial advisors. Alston &  Bird LLP and Latham & Watkins LLP served as Veritas’ legal counsel for the transaction. 

Cautionary Note Regarding Forward-Looking Statements 

This press release may include statements that express Cohesity’s and Veritas’ opinions,  expectations, beliefs, plans, objectives, assumptions or projections regarding future events or  future results and therefore are, or may be deemed to be, “forward-looking statements.” These  forward-looking statements can generally be identified by the use of forward-looking  terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,”  “projects,” “intends,” “plans,” “may,” “will” or “should” or, in each case, their negative or other  variations or comparable terminology. They include statements regarding Cohesity’s and  Veritas’ intentions, beliefs, projections or current expectations, including statements regarding  the expected timing of the closing of the transaction; the expected benefits of the transaction,  including the expected financial performance of the combined company and DataCo and the  benefits to customers of the combined company and DataCo; the ability of the parties to obtain  any required regulatory approvals in connection with the transaction and to complete the  transaction considering the various closing conditions; and expenses related to the transaction  and any potential future costs. If a change occurs, Cohesity’s business, financial condition,  liquidity and results of operations may vary materially from those expressed in forward-looking  statements. Readers are cautioned not to place undue reliance on forward-looking statements  as a predictor of future performance. Actual results and events in future periods may differ  materially from those expressed or implied by these forward-looking statements because they  are subject to a number of risks, uncertainties and other factors. Such risks and uncertainties  include, among others: (i) the occurrence of any event, change or other circumstance that could  give rise to the termination of the purchase agreement relating to the transaction or an inability  to consummate the transaction on the terms described or at all; (ii) the failure to obtain certain  required regulatory approvals to the completion of the transaction or the failure to satisfy any of  the other conditions to the completion of the transaction; (iii) any difficulties in the financing of  the transaction as a result of uncertainty or adverse developments in the debt or equity capital  markets or otherwise; (iv) the effect of the announcement of the transaction on the ability of  Cohesity and Veritas to retain and hire key personnel and maintain relationships with their key  business partners and customers, and others with whom they do business, or on their operating  results and businesses generally; (v) the response of competitors to the transaction; (vi) risks  associated with the disruption of management’s attention from ongoing business operations due  to the transaction; (vii) the ability to meet expectations regarding the timing and completion of  the transaction; (viii) significant costs associated with the transaction; (ix) potential litigation  relating to the transaction; and (x) restrictions during the pendency of the transaction that may  impact the ability to pursue certain business opportunities. These factors are not necessarily all  of the important factors that could cause Cohesity’s and Veritas’ actual results, performance or  achievements to differ materially from those expressed in or implied by any of the forward looking statements. Other unknown or unpredictable factors, many of which are beyond  Cohesity’s and Veritas’ control, also could harm the results, performance or achievements.  New factors emerge from time to time, and it is not possible for Cohesity and Veritas to predict  which factors will arise. In addition, Cohesity and Veritas cannot assess the impact of each factor on their business or the extent to which any factor, or combination of factors, may cause actual  results to differ materially from those contained in any forward-looking statements. 

All forward-looking statements contained in this press release are expressly qualified in their  entirety by the cautionary statements set forth above. Forward-looking statements speak only as  of the date they are made, and Cohesity and Veritas disclaim any obligation to update publicly  any of these statements to reflect actual results, new information, or future events, changes in  assumptions or changes in other factors affecting forward-looking statements, except to the  extent required by applicable laws. If Cohesity and/or Veritas updates one or more forward looking statements, no inference should be drawn that Cohesity and/or Veritas will make  additional updates with respect to those or other forward-looking statements.