DEFM14A 1 tm2127685-2_defm14a.htm DEFM14A tm2127685-2_defm14a - block - 107.922498s
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant ☒           Filed by a Party other than the Registrant ☐
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12
NortonLifeLock Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(3)
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(4)
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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NORTONLIFELOCK INC.
60 E. Rio Salado Parkway, Suite 1000
Tempe, Arizona 85281
YOUR VOTE IS VERY IMPORTANT
Dear Stockholder:
On August 10, 2021, NortonLifeLock Inc., a Delaware corporation (“NortonLifeLock” or the “Company”) and Avast plc, a public company incorporated in England and Wales (“Avast”), issued an announcement (the “Rule 2.7 Announcement”) pursuant to Rule 2.7 of the UK City Code on Takeovers and Mergers (the “UK Takeover Code”) disclosing that the boards of directors of the Company and Avast had reached an agreement on the terms of a recommended combination of Avast with the Company in the form of a recommended offer by Nitro Bidco Limited (“Bidco”), a private company incorporated in England and Wales and a wholly-owned subsidiary of the Company, for the entire issued and to be issued ordinary share capital of Avast (the “Merger”). The Merger will be implemented by means of a scheme of arrangement under Part 26 of the UK Companies Act 2006, as amended (the “UK Companies Act”), sanctioned by the High Court of Justice in England and Wales (the “Court”) (the “Scheme”). The boards of directors of NortonLifeLock and Avast believe the Merger has compelling strategic rationale and represents an attractive opportunity to create a new, industry leading consumer cyber safety business, leveraging the established brands, technical expertise and innovation of both groups to deliver substantial benefits to consumers, shareholders and other stakeholders.
Under the terms of the Merger, Avast shareholders will be entitled to receive for each ordinary share of nominal value £0.10 each in the capital of Avast (collectively, the “Avast Shares”) held, in respect of their entire holding of Avast Shares, $7.61 in cash and 0.0302 of a new Company share of common stock, with a par value of $0.01 per share to be issued in connection with the Merger (the “New NortonLifeLock Shares”)(such option, the “Majority Cash Option”). As an alternative to the Majority Cash Option, Avast shareholders may elect, in respect of their entire holding of Avast Shares, to receive for each Avast Share held, $2.37 in cash and 0.1937 of a New NortonLifeLock Share (such option, the “Majority Stock Option”). The Scheme will lapse if the Merger is not completed before 11:59 p.m. UK time on December 31, 2022 or such later time and/or date (if any) as Bidco and Avast may agree in writing (with the consent of the UK Panel on Takeovers and Mergers (the “Panel”) and as the Court may approve (if such consent or approval is required)) (such date, the “Long Stop Date”).
The number of New NortonLifeLock Shares to be issued for each Avast Share with respect to the Majority Cash Option and the number of New NortonLifeLock Shares to be issued for each Avast Share with respect to which the Majority Stock Option is elected are each fixed and will not change between now and the date of the closing of the Merger (referred to as the effective date), regardless of whether the market price of the shares of common stock of NortonLifeLock changes during such period. Upon completion of the Merger, and subject to the elections made by Avast shareholders, Avast shareholders will own between approximately 14% (if all Avast shareholders, other than the Avast directors who hold Avast Shares, receive the Majority Cash Option) and approximately 26% (if all Avast shareholders elect for the Majority Stock Option) of the combined group of NortonLifeLock and Avast (the “Combined Company”).
NortonLifeLock is calling a special meeting of its stockholders to be held on November 4, 2021 at 9:00 a.m. (Pacific Time) in connection with the proposed Merger (the “special meeting”). At the special meeting, NortonLifeLock stockholders will be asked to consider and vote on:
 

 
1.
The proposal to approve the issuance of New NortonLifeLock Shares representing the stock consideration in the Merger (the “Share Issuance Proposal”).
2.
The proposal to adjourn the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of such adjournment to approve the Share Issuance Proposal(the “Adjournment Proposal”).
The NortonLifeLock board of directors has unanimously determined that the Merger is fair to and in the best interests of NortonLifeLock and its stockholders and has authorized and approved the issuance of New NortonLifeLock Shares. THE NORTONLIFELOCK BOARD OF DIRECTORS RECOMMENDS THAT NORTONLIFELOCK STOCKHOLDERS VOTE “FOR” THE SHARE ISSUANCE PROPOSAL AND “FOR” THE ADJOURNMENT PROPOSAL.
We cannot complete the Merger unless NortonLifeLock stockholders approve the Share Issuance Proposal. Approval of the Share Issuance Proposal and the Adjournment Proposal require the affirmative vote of the holders of a majority of the shares of NortonLifeLock common stock entitled to vote thereon that are present virtually or represented by proxy at the special meeting. The holders of a majority of the shares of NortonLifeLock common stock entitled to vote at the special meeting present virtually or by proxy shall constitute a quorum for the transaction of business.
Whether or not you plan to attend the special meeting virtually and regardless of the number of shares you own, your careful consideration of, and vote on, the proposals is important, and we encourage you to vote promptly. After reading the accompanying proxy statement, please make sure to vote your shares promptly by completing, signing and dating the accompanying proxy card and returning it in the enclosed prepaid envelope or by voting by telephone or through the Internet by following the instructions on the accompanying proxy card. Instructions regarding all three methods of voting are provided on the proxy card. If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee.
The proxy statement accompanying this letter provides you with more specific information concerning the special meeting, the Merger and the Share Issuance Proposal. The proxy statement also describes the determinations of the board of directors of the Company in connection with its evaluation of the Merger and the issuance of New NortonLifeLock Shares to Avast shareholders as consideration in the Merger. A copy of the Rule 2.7 Announcement is attached as Annex A to the proxy statement, and a copy of the co-operation agreement, dated as of August 10, 2021, by and among the Company, Bidco and Avast (the “Co-operation Agreement”), is attached as Annex B to the proxy statement. We encourage you to carefully read the accompanying proxy statement, in particular the “Risk Factors” section beginning on page 18 for a discussion of risks relevant to the Merger, and its annexes carefully and in their entirety.
Thank you in advance for your continued support and your consideration of these matters.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Bryan Ko
BRYAN KO
Chief Legal Officer and Secretary
Tempe, Arizona
October 4, 2021
Neither the United States Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved of the Merger, including the issuance of New NortonLifeLock Shares, passed upon the merits or fairness of the Merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.
This proxy statement is dated October 4, 2021, and is first being mailed to NortonLifeLock stockholders on or about October 4, 2021.
 

 
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60 E. Rio Salado Parkway, Suite 1000
Tempe, Arizona 85281
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
to be held on:
November 4, 2021
9:00 a.m. Pacific Time
Dear Stockholder:
Please take notice that the board of directors of NortonLifeLock Inc., a Delaware Corporation (“NortonLifeLock” or the “Company”) has called a special meeting of the stockholders of NortonLifeLock which will be held at 9:00 a.m. (Pacific Time) on November 4, 2021, or at any adjournment or postponement thereof (the “special meeting”). The special meeting will be completely virtual and conducted via live webcast. You will be able to attend the special meeting online and submit your questions prior to or during the special meeting by visiting www.virtualshareholdermeeting.com/NLOK2021SM. You will also be able to vote your shares electronically at the special meeting. Hosting a virtual meeting enables increased stockholder attendance and participation since stockholders can participate from any location around the world. In addition, the online format will allow us to communicate more effectively with you via a pre-meeting forum that you can enter by visiting www.virtualshareholdermeeting.com/NLOK2021SM and submit questions in advance of the special meeting. The special meeting is being held for the purpose of considering and taking appropriate action with respect to the following (referred to as the “NortonLifeLock proposals”):
1.
To consider and vote on a proposal to approve the issuance of shares (the “Share Issuance Proposal”) of common stock, par value $0.01 per share, of NortonLifeLock (the “New NortonLifeLock Shares”) to shareholders of Avast plc, a company incorporated in England and Wales (“Avast”) in connection with the proposed acquisition by the Company of the entire issued and to be issued ordinary shares of Avast (which we refer to as the “Merger”). Avast shareholders will be entitled to receive for each ordinary share of nominal value £0.10 each in the capital of Avast (collectively, the “Avast Shares”) held, in respect of their entire holding of Avast Shares, $7.61 in cash and 0.0302 of a new Company share of common stock, with a par value of $0.01 per share to be issued in connection with the Merger (the “New NortonLifeLock Shares”) (such option, the “Majority Cash Option”). As an alternative to the Majority Cash Option, Avast shareholders may elect, in respect of their entire holding of Avast Shares, to receive for each Avast Share held, $2.37 in cash and 0.1937 of a New NortonLifeLock Share (such option, the “Majority Stock Option”). Upon completion of the Merger, and subject to the elections made by Avast shareholders, Avast shareholders will own between approximately 14% (if all Avast shareholders, other than the Avast directors who hold Avast Shares, receive the Majority Cash Option) and approximately 26% (if all Avast shareholders elect for the Majority Stock Option) of the combined group of NortonLifeLock and Avast (the “Combined Company”).
2.
To adjourn the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of such adjournment to approve the Share Issuance Proposal (the “Adjournment Proposal”).
Completion of the Merger is conditioned on, among other things, NortonLifeLock stockholder approval of the Share Issuance Proposal.
 

 
The NortonLifeLock board of directors has unanimously determined that the Merger is fair to and in the best interests of NortonLifeLock and its stockholders and has authorized and approved the issuance of New NortonLifeLock Shares. THE NORTONLIFELOCK BOARD OF DIRECTORS RECOMMENDS THAT NORTONLIFELOCK STOCKHOLDERS VOTE “FOR” THE SHARE ISSUANCE PROPOSAL AND “FOR” THE ADJOURNMENT PROPOSAL.
Only holders of record of NortonLifeLock common stock at the close of business on October 13, 2021, the record date, are entitled to receive notice of, and to vote at, the special meeting or at any adjournments or postponements thereof.
The Share Issuance Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of NortonLifeLock common stock represented virtually or by proxy and entitled to vote on such proposal at the special meeting. Failures to vote and broker non-votes, if any, will have no effect on the Share Issuance Proposal. Votes to abstain will have the effect of a vote “against” the Share Issuance Proposal.
You may vote your shares via the Internet by accessing the URL listed on your proxy card and following the instructions on the website, no later than 8:59 p.m. Pacific Time on November 3, 2021 (as directed on the enclosed proxy card), by telephone, or by completing, signing and promptly returning the enclosed proxy card by mail. If you choose to submit your proxy card by mail, NortonLifeLock has enclosed a prepaid return envelope for your use, which is prepaid if mailed in the United States. If you are virtually attending the special meeting and your shares are registered in your name, you may also vote at the special meeting until voting is closed.
YOUR VOTE IS IMPORTANT. All holders of NortonLifeLock common stock are cordially invited to attend the special meeting virtually. Whether or not you plan to attend the special meeting virtually, you are requested to complete and return the enclosed proxy card in the accompanying prepaid return envelope or vote your shares via the Internet. You may revoke your proxy at any time before it is exercised by giving written notice to the Corporate Secretary of NortonLifeLock at NortonLifeLock Inc., 60 E. Rio Salado Parkway, Suite 1000, Tempe, Arizona 85281, Attention: Corporate Secretary, or returning a later-dated proxy.
If you hold your shares through a broker or bank in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee.
The proxy statement provides you with more specific information concerning the special meeting, the Merger and the Share Issuance Proposal. The proxy statement also describes the determinations of the board of directors of the Company in connection with its evaluation of the Merger and the issuance of New NortonLifeLock Shares to Avast shareholders as consideration in the Merger. A copy of the announcement (the “Rule 2.7 Announcement”) issued on August 10, 2021 by NortonLifeLock and Avast pursuant to Rule 2.7 of the UK City Code on Takeovers and Mergers (the “UK Takeover Code”) disclosing that the boards of directors of NortonLifeLock and Avast had reached an agreement on the terms of the Merger in the form of a recommended offer by Nitro Bidco Limited (“Bidco”), a private company incorporated in England and Wales and a wholly-owned subsidiary of NortonLifeLock, for the entire issued and to be issued ordinary share capital of Avast, is attached as Annex A to the proxy statement. A copy of the co-operation agreement, dated as of August 10, 2021, by and among the Company, Bidco and Avast (the “Co-operation Agreement”) is attached as Annex B to the proxy statement. We encourage you to carefully read the accompanying proxy statement, in particular the “Risk Factors” section beginning on page 18 for a discussion of risks relevant to the Merger, and its annexes carefully and in their entirety.
Additionally, in accordance with Rule 26.1 of the UK Takeover Code, a copy of the proxy statement will, subject to certain restrictions relating to persons resident in restricted jurisdictions, be available at www.NortonLifeLock.com by not later than 12 noon (London time) on October 5, 2021. The content of the website referred to above is not incorporated into and does not form part of the proxy statement.
 

 
If you have any questions concerning the Merger or the proxy statement, would like additional copies or need help voting your shares of NortonLifeLock common stock, please contact NortonLifeLock’s proxy solicitor:
D.F. King & Co., Inc.
48 Wall Street, 22nd Floor
New York, NY 10005
Stockholders call toll-free: (800) 591-8263
Banks and brokers call: (212) 269-5550
NLOK@dfking.com
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Bryan Ko
BRYAN KO
Chief Legal Officer and Secretary
Tempe, Arizona
October 4, 2021
 

 
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement incorporates important business and financial information about NortonLifeLock from other documents that NortonLifeLock has filed with the U.S. Securities and Exchange Commission (the “SEC”) and that are contained in or incorporated by reference into this proxy statement. For a listing of documents incorporated by reference into this proxy statement, please see the section entitled “Where You Can Find Additional Information” beginning on page 123. This information is available for you free of charge to review through the SEC’s website at www.sec.gov.
Any person may request a copy of this proxy statement and any of the documents incorporated by reference into this proxy statement or other information concerning NortonLifeLock, without charge, by written request directed to the appropriate company or its proxy solicitor at the following contacts:
Company:
NortonLifeLock Inc.
60 E. Rio Salado Parkway, Suite 1000
Tempe, Arizona 85281
Attn: Corporate Secretary
Solicitor:
D.F. King & Co., Inc.
48 Wall Street, 22nd Floor
New York, NY 10005
Stockholders call toll-free: (800) 591-8263
Banks and brokers call: (212) 269-5550
NLOK@dfking.com
In order for you to receive timely delivery of the documents in advance of the special meeting of NortonLifeLock stockholders to be held on November 4, 2021, you must request the information no later than October 21, 2021.
The contents of the websites of the SEC and NortonLifeLock or any other entity are not being incorporated into this proxy statement. The information about how you can obtain certain documents that are incorporated by reference into this proxy statement at these websites is being provided only for your convenience.
 

 
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QUESTIONS AND ANSWERS
The following are some questions that you, as a NortonLifeLock stockholder, may have about the Merger, the NortonLifeLock share issuance or the special meeting, as applicable, and brief answers to those questions. These questions and answers may not address all questions that may be important to you as a stockholder of NortonLifeLock. We encourage you to read carefully the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement, and the documents we incorporate by reference in this proxy statement. You may obtain the documents and information incorporated by reference into this proxy statement without charge by following the instructions under “Where You Can Find More Information” beginning on page 123.
Q:
Why am I receiving this proxy statement?
A:
We are sending this proxy statement and the enclosed proxy card to you in connection with the solicitation of proxies to be voted at a special meeting of NortonLifeLock stockholders. As a stockholder, you are invited to attend the special meeting virtually and are entitled and requested to vote on the proposals described in this proxy statement.
Q:
How can I attend the special meeting and submit questions?
A:
The special meeting of NortonLifeLock stockholders will be held at 9:00 a.m. (Pacific Time) on November 4, 2021, or at any adjournment or postponement thereof. To attend the special meeting virtually and submit your questions prior to or during the special meeting, please visit www.virtualshareholdermeeting.com/NLOK2021SM. To participate in the special meeting or to submit questions in advance of the special meeting, you will need the 16-digit control number included with your proxy materials, on your proxy card, Notice of Internet Availability or on the instructions that accompanied your proxy materials. You will also be able to vote your shares electronically at the special meeting.
Q:
What if during the check-in time or during the special meeting I have technical difficulties or trouble accessing the virtual special meeting website?
A:
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual special meeting. If you encounter any difficulties accessing the virtual special meeting during the check-in or special meeting time, please call the customer support numbers which will be shown on the virtual shareholder special meeting site approximately 30 minutes before the start of the special meeting.
Q:
Why are you not holding the special meeting in a physical location?
A:
We are excited to embrace the latest technology to provide expanded access, improved communication and cost savings for our stockholders. Hosting a virtual special meeting will enable increased stockholder attendance and participation since stockholders can participate from any location around the world. In addition, we believe the online format allows us to communicate effectively with you via a pre-meeting forum that you can enter by visiting www.virtualshareholdermeeting.com/NLOK2021SM.
Q:
Who is entitled to vote at the special meeting?
A:
Only holders of record of NortonLifeLock shares of common stock as of the close of business on October 13, 2021 (the “Record Date”) are entitled to vote at the special meeting. As of the close of business on September 10, 2021, NortonLifeLock had outstanding 581,736,129 shares of NortonLifeLock common stock.
Q:
What is the purpose of the special meeting?
A:
On August 10, 2021, NortonLifeLock and Avast released the Rule 2.7 Announcement disclosing the terms of the Merger. Under the terms of the Merger, Avast shareholders will be entitled to receive for each Avast Share held, in respect of their entire holding of Avast Shares, $7.61 in cash and 0.0302 of a New NortonLifeLock Share (such option, the “Majority Cash Option”). As an alternative
 
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to the Majority Cash Option, Avast shareholders may elect, in respect of their entire holding of Avast Shares, to receive for each Avast Share held, $2.37 in cash and 0.1937 of a New NortonLifeLock Share (such option, the “Majority Stock Option”). The Merger is to be effected by means of a court-sanctioned scheme of arrangement between Avast and Avast shareholders under the UK Companies Act.
Because our common stock is listed on the Nasdaq Global Select Market (“Nasdaq”), we are subject to the Nasdaq Stock Market rules (the “Nasdaq rules”), and Nasdaq Listing Rule 5635(a) requires stockholder approval prior to the issuance of common stock in any transaction if the common stock has, or will have upon issuance, voting power equal to or in excess of 20% of the voting power outstanding before the issuance of the common stock. The shares of common stock to be issued to shareholders of Avast as consideration in the Merger may (depending on elections for the Majority Stock Option made by the shareholder of Avast) represent voting power in excess of 20% of the total voting power outstanding before the issuance. Therefore, under Nasdaq Listing Rule 5635(a), stockholder approval of the share issuance is required.
Accordingly, NortonLifeLock will hold a special meeting of its stockholders in connection with the issuance of the shares of NortonLifeLock’s common stock representing the stock consideration in the Merger. At the special meeting, our stockholders will be asked to consider and vote on a proposal to approve this share issuance as well as a proposal to adjourn the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of such adjournment to approve the Share Issuance Proposal (as defined below).
Q:
What proposals will be considered at the special meeting?
A:
At the special meeting, you will be asked to consider and vote on:

A proposal to consider and approve the issuance of shares (the “Share Issuance Proposal”) of New NortonLifeLock Shares to shareholders of Avast in connection with the Merger.

A proposal to adjourn the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of such adjournment to approve the Share Issuance Proposal (the “Adjournment Proposal”).
Q:
Are proxies being solicited from Avast shareholders?
A:
No, only NortonLifeLock’s stockholders’ proxies are being solicited. We are not soliciting any proxies or votes from Avast shareholders through this proxy statement. If you are an Avast shareholder and are not a NortonLifeLock stockholder, you should not treat this proxy statement as any solicitation of your proxy, vote or support on any matter. If you are both a NortonLifeLock stockholder and an Avast shareholder, you should treat this proxy statement as soliciting only your proxy with respect to the NortonLifeLock shares held by you and should not treat it as an offer or invitation to subscribe or purchase NortonLifeLock shares or as a solicitation of your proxy, vote or support on any matter with respect to your Avast ordinary shares.
Q:
Is NortonLifeLock stockholder approval required to complete the Merger?
A:
Yes, NortonLifeLock stockholder approval is a condition to the closing of the Merger, therefore approval of the Share Issuance Proposal is required for us to complete the Merger. This will be the only opportunity for our stockholders to consider and vote upon the transactions contemplated in connection with the Merger.
Q:
What vote is required to approve each of the proposals? What will happen if I fail to vote or abstain from voting on each proposal?
A:
Each of the Share Issuance Proposal and the Adjournment Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of NortonLifeLock common stock represented virtually or by proxy and entitled to vote on such proposal at the special meeting. Failures to vote
 
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and broker non-votes, if any, will have no effect on the Share Issuance Proposal. Votes to abstain will have the effect of a vote “against” the Share Issuance Proposal.
Q:
How does the NortonLifeLock board of directors recommend that I vote on the proposals?
A:
Our board of directors recommends that you vote “FOR” the Share Issuance Proposal and “FOR” the Adjournment Proposal. For a discussion of the factors that the NortonLifeLock board of directors considered in determining to make the foregoing recommendation, please see the section entitled “Information About the Merger — Reasons for the Merger” beginning on page 42. In addition, in considering the recommendation of the NortonLifeLock board of directors, you should be aware that some of NortonLifeLock’s directors and executive officers have interests that may be different from, or in addition to, the interests of NortonLifeLock stockholders generally. See the section entitled “Information About the Merger — Interests of Certain NortonLifeLock Directors and Executive Officers in the Merger” beginning on page 67.
Q:
What percentage of the Combined Company will NortonLifeLock stockholders hold immediately following the consummation of the Merger?
A:
Upon completion of the Merger, and subject to the elections made by Avast shareholders, NortonLifeLock stockholders will own between approximately 86% (if all Avast shareholders, other than the Avast directors who hold Avast Shares, receive the Majority Cash Option) and approximately 74% (if all Avast shareholders elect for the Majority Stock Option) of the Combined Company.
Q:
Who will be the directors and executive officers of the Combined Company following the Merger?
A:
Following completion of the Merger, it is intended that Avast’s CEO, Ondrej Vlcek, will join NortonLifeLock as President and become a member of the NortonLifeLock board of directors. In addition, Pavel Baudiš, a co-founder of Avast and current member of the Avast board of directors, is expected to join the NortonLifeLock board of directors as an independent director. It is intended further that, upon completion of the Merger, each of the non-executive members of the Avast board of directors will resign as directors of Avast. Following completion of the Merger, it is intended that Vincent Pilette, CEO of NortonLifeLock, will be CEO of the Combined Company, and Natalie Derse, CFO of NortonLifeLock, will be CFO of the Combined Company.
Q:
Where will the headquarters of the Combined Company be located following the Merger?
A:
On completion of the Merger, the Combined Company will be dual headquartered in Tempe, Arizona, USA, and Prague, Czech Republic, and will have a significant presence in the Czech Republic.
Q:
What changes will there be to the listing and name of Combined Company?
A:
The Combined Company will not change its listing and will continue to be listed solely on Nasdaq. NortonLifeLock intends to undertake a review process, in collaboration with Avast’s CEO, to determine the post-Merger name of the Combined Company to ensure that it best reflects its strategic vision of expanding its cyber safety platform with trust-based solutions and its broad global prospects.
Q:
Will the New NortonLifeLock Shares be traded on an exchange?
A:
Yes. The New NortonLifeLock Shares will be listed on Nasdaq.
Q:
Do any executive officers or directors of NortonLifeLock have interests in the Merger or the issuance of shares of NortonLifeLock common stock to Avast shareholders that may be different from, or in addition to, those of other stockholders?
A:
NortonLifeLock’s directors and executive officers may have interests in the Merger that are different from, or in addition to, the interests of NortonLifeLock’s stockholders generally. The transaction does not constitute a “change in control” under any compensation or benefit plans,
 
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programs or arrangements of NortonLifeLock and NortonLifeLock’s directors and named executive officers are not entitled to any additional compensation or benefits that relate to or are contingent upon the transaction. However, NortonLifeLock’s directors and executive officers will continue to serve on the board of directors and as executive officers of the Combined Company, respectively. The members of the NortonLifeLock’s board of directors were aware of and considered these interests in evaluating and negotiating the Co-operation Agreement and approving the Merger and in determining to recommend to NortonLifeLock stockholders that they approve the Share Issuance Proposal and the Adjournment Proposal.
These interests are described in more detail in the section entitled “Information About the Merger — Interests of Certain NortonLifeLock Directors and Executive Officers in the Merger” beginning on page 67.
Q:
Do I need to attend the special meeting virtually?
A:
No. It is not necessary for you to attend the special meeting virtually in order to vote your shares. You may vote by mail, by telephone or through the Internet, as described in more detail below.
Q:
How many shares need to be represented at the special meeting?
A:
A quorum requires the presence, virtually or by proxy, of the holders of a majority of the shares of NortonLifeLock common stock entitled to vote at the special meeting, which, as of September 10, 2021, totaled 581,736,129 shares. Abstentions will be counted in determining whether a quorum exists.
If you are a NortonLifeLock stockholder as of the close of business on the Record Date and you vote by mail, by telephone, through the Internet or virtually at the special meeting, you will be considered part of the quorum. If you are a “street name” holder of shares of NortonLifeLock capital stock and you provide your bank, broker, trust or other nominee with voting instructions, then your shares will be counted in determining the presence of a quorum. If you are a “street name” holder of shares and you do not provide your bank, broker, trust or other nominee with voting instructions, then your shares will not be counted in determining the presence of a quorum.
All shares of NortonLifeLock capital stock held by holders that are present virtually, or represented by proxy, and entitled to vote at the special meeting, regardless of how such shares are voted or whether such holders have indicated on their proxy that they are abstaining from voting, will be counted in determining the presence of a quorum. In the absence of a quorum, the special meeting may be adjourned.
Q:
What do I need to do now?
A:
After carefully reading and considering the information contained in this proxy statement and the Annexes attached to this proxy statement, please vote your shares of NortonLifeLock common stock in one of the ways described below as soon as possible. Each stockholder is entitled to cast one vote for each share of common stock owned as of the close of business on that Record Date. If you hold your shares in “street name,” please refer to the voting instruction forms provided by your broker, bank or other nominee to vote your shares.
Q:
How do I vote if I am a stockholder of record?
A:
You may vote by:

submitting your proxy by completing, signing and dating each proxy card you receive and returning it by mail in the enclosed prepaid envelope;

submitting your proxy by using the telephone number printed on each proxy card you receive;

submitting your proxy through the Internet voting instructions printed on each proxy card you receive; or

by appearing virtually at the special meeting and voting by ballot.
 
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If you are submitting your proxy by telephone or through the Internet, your voting instructions must be received by 8:59 p.m. Pacific Time on November 3, 2021, the day before the special meeting.
Submitting your proxy by mail, by telephone or through the Internet will not prevent you from voting virtually at the special meeting. You are encouraged to submit a proxy by mail, by telephone or through the Internet even if you plan to attend the special meeting virtually to ensure that your shares of NortonLifeLock common stock are represented at the special meeting.
If you return your signed proxy card, but do not mark the boxes showing how you wish to vote, your shares will be voted “FOR” the approval of the Share Issuance Proposal and the Adjournment Proposal.
Q:
If my shares are held for me by a bank, broker, trust or other nominee, will my bank, broker, trust or other nominee vote those shares for me with respect to the proposals?
A:
Under the Nasdaq rules, brokers who hold shares in a “street name” for a beneficial owner typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from the beneficial owner on how to vote. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters that the Nasdaq rules do not deem “routine.” None of the NortonLifeLock proposals to be voted on at the special meeting are routine under the Nasdaq rules. Consequently, your bank, broker, trust or other nominee will NOT have the power to vote your shares of NortonLifeLock common stock at the special meeting unless you provide instructions to your bank, broker, trust or other nominee on how to vote on each NortonLifeLock proposal. You should instruct your bank, broker, trust or other nominee on how to vote your shares with respect to the NortonLifeLock proposals, using the instructions provided by your bank, broker, trust or other nominee. You may be able to vote by telephone or through the Internet if your bank, broker, trust or other nominee offers these options.
Q:
What if I fail to instruct my bank, broker, trust or other nominee how to vote?
A:
Your bank, broker, trust or other nominee will NOT be able to vote your shares of NortonLifeLock common stock unless you have properly instructed your bank, broker, trust or other nominee on how to vote.
Q:
What is a proxy?
A:
A proxy is your legal designation of another person, referred to as a “proxy,” to vote shares of stock. The written document describing the matters to be considered and voted on at the special meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of NortonLifeLock common stock is called a “proxy card.” Our board of directors has designated Vincent Pilette, Natalie Derse, and Bryan Ko and each of them, with full power of substitution, as proxies for the special meeting.
Q:
If a stockholder gives a proxy, how are the shares voted?
A:
When proxies are properly dated, executed and returned, the shares represented by such proxies will be voted at the special meeting in accordance with the instructions of the stockholder. If no specific instructions are given on properly-executed returned proxies, however, the shares will be voted in accordance with the recommendations of our board of directors as described above. If any matters not described in the proxy statement are properly presented at the special meeting, the proxy holders will use their own judgment to determine how to vote your shares. If the special meeting is adjourned, the proxy holders can vote your shares on the new special meeting date as well, unless you have revoked your proxy instructions, as described below under “May I change my vote after I have mailed my proxy card or after I have submitted my proxy by telephone or through the Internet”?
Q:
What happens if I do not vote or return a proxy?
A:
A quorum will exist at the special meeting only if the holders of record of a majority of the shares of NortonLifeLock common stock entitled to vote at the special meeting are present virtually or by
 
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proxy. Your failure to vote on the proposals, by failing to either submit a proxy or attend the special meeting virtually if you are a stockholder of record, may result in the failure of a quorum to exist at the special meeting.
Q:
May I change my vote after I have mailed my proxy card or after I have submitted my proxy by telephone or through the Internet?
A:
Yes. You may revoke your proxy or change your vote at any time before it is voted at the special meeting. You may revoke your proxy by delivering a signed written notice of revocation stating that the proxy is revoked and bearing a date later than the date of the proxy to NortonLifeLock’s Corporate Secretary at 60 E. Rio Salado Parkway, Suite 1000, Tempe, Arizona 85281. You may also revoke your proxy or change your vote by submitting another proxy by telephone or through the Internet in accordance with the instructions on the enclosed proxy card. You may also submit a later-dated proxy card relating to the same shares of NortonLifeLock common stock. If you voted by completing, signing, dating and returning the enclosed proxy card, you should retain a copy of the voter control number found on the proxy card in the event that you later decide to revoke your proxy or change your vote by telephone or through the Internet. Alternatively, your proxy may be revoked or changed by virtually attending the special meeting and voting virtually. However, simply virtually attending the special meeting without voting will not revoke or change your proxy. “Street name” holders of shares of NortonLifeLock common stock should contact their bank, broker, trust or other nominee to obtain instructions as to how to revoke or change their proxies.
If you have instructed a bank, broker, trust or other nominee to vote your shares, you must follow the instructions received from your bank, broker, trust or other nominee to change your vote.
All properly submitted proxies received by NortonLifeLock before the special meeting that are not revoked or changed prior to being exercised at the special meeting will be voted at the special meeting in accordance with the instructions indicated on the proxies or, if no instructions were provided, “FOR” the Share Issuance Proposal and the Adjournment Proposal, if necessary.
Q:
What happens if I abstain?
A:
If you vote to abstain, whether by proxy or virtually at the special meeting, or if you instruct your broker, bank or other nominee to vote to abstain, your abstention will effectively be treated as a vote cast against the Share Issuance Proposal and the Adjournment Proposal. NortonLifeLock shares of common stock that are voted to abstain are treated as shares that are represented at the special meeting for purposes of determining whether a quorum exists.
Q:
Do I have appraisal or dissenters’ rights?
A:
No appraisal or dissenters’ rights are available to the holders of NortonLifeLock common stock in connection with the Merger.
Q:
Are any NortonLifeLock stockholders already committed to vote in favor of the share issuance proposal?
A:
NortonLifeLock currently expects NortonLifeLock’s directors and executive officers to vote their shares in favor of the Stock Issuance Proposal and the Adjournment Proposal, but none of NortonLifeLock’s directors or executive officers have entered into any agreement obligating them to do so. As of September 10, 2021, the directors and executive officers of NortonLifeLock held an aggregate of approximately 3.2% of the shares of our common stock entitled to vote at the special meeting.
Q:
What happens if I sell my shares of NortonLifeLock common stock before the special meeting?
A:
The Record Date for NortonLifeLock common stockholders entitled to vote at the special meeting is earlier than the date of the special meeting. If you transfer your shares after the Record Date but before the special meeting, you will, unless special arrangements are made to confer the voting rights with respect to such shares to the transferee, retain your right to vote at the special meeting.
 
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Q:
What are the conditions to completing the Merger?
A:
Part A of Appendix 1 to the Rule 2.7 Announcement (and, when published, the Scheme Document (as defined below)) sets out the conditions to consummating the Merger. The completion of the Merger will be conditioned upon, among other things:

The approval of the Scheme (as defined below) by a majority in number of Avast shareholders present (in person or by proxy) and voting at the Avast shareholder meeting to be convened pursuant to an order of the Court (the “Court Meeting”) to consider and vote on the Scheme, which majority represents at least 75% in value of the Avast Shares held by such Avast shareholders;

The passing of all resolutions necessary to approve and implement the Scheme by the requisite majority of Avast shareholders present (in person or by proxy) and voting at the general meeting of Avast shareholders (the “General Meeting”) or at any adjournment of that meeting;

The approval of the Share Issuance Proposal by NortonLifeLock’s stockholders;

The approval of the New NortonLifeLock Shares issued pursuant to the Share Issuance Proposal for listing on Nasdaq, subject to official notice of issuance;

The receipt or waiver of applicable antitrust and regulatory approvals, and

The sanction of the Scheme by the Court (with or without modification on terms agreed by Bidco and Avast) and the delivery of a copy of the order of the Court sanctioning the Scheme to the Registrar of Companies in England and Wales.
Q:
When is the Merger expected to be completed?
A:
Subject to the satisfaction or waiver of the closing conditions described in the section entitled “Information About the Merger — The Rule 2.7 Announcement and the Scheme of Arrangement — Conditions to the Merger” beginning on page 59, including the approval of the Share Issuance Proposal by NortonLifeLock common stockholders at the special meeting, the transaction is expected to be consummated in mid-2022. However, it is possible that factors outside the control of both companies could result in the Merger being completed at a later time or lapsing.
Q:
What happens if the Merger is not completed?
A:
If the Share Issuance Proposal is not approved by our stockholders or if the Merger is not completed for any other reason, the NortonLifeLock and Avast businesses will not be combined. Accordingly, Avast shareholders will not receive shares of NortonLifeLock common stock or cash. In certain circumstances NortonLifeLock may be required to pay Avast a break payment if the Merger is not completed. Please see the section entitled “Information About the Merger — The Co-operation Agreement — Break Payments” beginning on page 62 for further details.
Q:
What should I do if I receive more than one set of voting materials?
A:
You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, date, sign and return (or vote via the Internet or telephone with respect to) each proxy card and voting instruction card that you receive to ensure that all of your shares are counted.
Q:
What is “householding”?
A:
We have adopted a procedure approved by the SEC called “householding.” Under this procedure, stockholders who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of the proxy statement unless one or more of these stockholders notifies us that they wish to continue receiving individual copies. This procedure reduces
 
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our printing costs and postage fees. Each stockholder who participates in householding will continue to be able to access or receive a separate proxy card.
If you are a registered stockholder and wish to receive a separate proxy statement, we will provide these materials upon request. To receive a separate copy of the annual report and other proxy materials, you may write or call NortonLifeLock’s Investor Relations department at 60 E. Rio Salado Parkway, Suite 1000, Tempe, Arizona 85281, Attn: Investor Relations, telephone number (650) 527-8000. If you hold your shares beneficially and wish to receive a separate proxy statement, please contact your bank or broker.
Q:
Where can I find the voting results of the special meeting?
A:
NortonLifeLock intends to announce preliminary voting results at the special meeting and publish final results in a Current Report on Form 8-K that will be filed with the SEC following the special meeting. All reports NortonLifeLock files with the SEC are publicly available when filed — see “Where You Can Find More Information” beginning on page 123 of this proxy statement.
Q:
Who will solicit and pay the cost of soliciting proxies?
A:
NortonLifeLock has retained D.F. King & Co., Inc., to assist in the solicitation process. NortonLifeLock will pay D.F. King & Co., Inc. a fee of approximately $12,500, as well as reasonable and documented out-of-pocket expenses. NortonLifeLock has also agreed to indemnify D.F. King & Co., Inc. against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions).
Q:
Whom do I call if I have questions about the special meetings, the proposals or the other matters discussed in this proxy statement?
A:
If you have questions about the NortonLifeLock special meeting, the proposals or the other matters discussed in this proxy statement, or desire additional copies of this proxy statement or additional proxies, you may contact D.F. King & Co., Inc., toll-free at 1 (800) 591-8263 or collect at (212) 269-5550.
 
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SUMMARY OF THE PROXY STATEMENT
This summary highlights selected information also contained elsewhere in this proxy statement related to the matters upon which you are being asked to vote and may not contain all of the information important to you. You should read this entire document, its annexes and the other documents to which this proxy statement refers you to fully understand the matters upon which you are being asked to vote. Each item in this summary refers to the page on which that subject is hereinafter discussed in more detail. Except as otherwise noted or where context otherwise requires, references in this proxy statement to “NortonLifeLock,” the “Company,” “we,” “us” and “our” refer to NortonLifeLock Inc., references to the “NortonLifeLock Group” refer to NortonLifeLock and its subsidiaries, references to “Bidco” refer to Nitro Bidco Limited, a wholly owned subsidiary of NortonLifeLock, references to “Avast” refer to Avast plc, references to the “Avast Group” refer to Avast and its subsidiaries and references to the “Combined Company” refer to the combined group of NortonLifeLock and Avast following the completion of the Merger (as defined below).
The Parties
NortonLifeLock Inc.
60 E. Rio Salado Parkway, Suite 1000
Tempe, Arizona 85281
Phone: (650) 527-8000
NortonLifeLock, a Delaware corporation, is a leading provider of consumer cyber safety solutions built around protecting and empowering people to live their digital lives safely. Founded in 1982 and headquartered in Tempe, Arizona, NortonLifeLock serves over 80 million users in more than 150 countries, including 23 million direct customers.
NortonLifeLock’s service offering is positioned across three key cyber safety pillars: Security, providing protection for PCs, Macs and mobile devices against malware, viruses, adware, ransomware and other online threats; Identity Protection, which includes monitoring, alerts and restoration services to protect the safety of customers; and Online Privacy, which provides enhanced security and online privacy through an encrypted data tunnel and other privacy monitoring services.
NortonLifeLock’s subscription-based cyber safety solutions are primarily sold direct-to-consumer through its NortonLifeLock and Avira websites, and indirectly through partner relationships with retailers, telecom service providers, hardware original equipment manufacturers (OEMs), and employee benefit providers. The acquisition of Avira in 2020 expanded NortonLifeLock’s go-to-market into the freemium channel.
The address of NortonLifeLock’s principal executive office is 60 E. Rio Salado Parkway, Suite 1000, Tempe, Arizona 85281 and its phone number is (650) 527-8000. NortonLifeLock’s stock is listed on Nasdaq under the symbol “NLOK.”
Nitro Bidco Limited
Bidco is a newly incorporated private limited company and a wholly-owned subsidiary of NortonLifeLock. Bidco has been formed at the direction of NortonLifeLock for the purposes of implementing the Merger. Bidco has not traded since its date of incorporation, nor has it entered into any obligations other than in connection with the Merger.
The address of Bidco’s principal executive office is c/o NortonLifeLock Inc., 60 E. Rio Salado Parkway, Suite 1000, Tempe, Arizona 85281 and its phone number is (650) 527-8000.
Avast plc
Avast is a leading global cybersecurity provider that is dedicated to keeping people safe and private online. Avast safeguards more than 435 million users worldwide, protecting their digital data, identity and privacy, with 1.5 billion attacks and over 200 million new files blocked each month on average in 2020.
 
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Avast offers security software under the Avast and AVG brands, in the form of both free and paid-for products. Avast has customers in the vast majority of countries in the world.
The majority of Avast’s revenues are derived from the Avast Group’s consumer direct operations, which primarily involves up-selling paid antivirus software with advanced features to users of its free antivirus software, and cross-selling adjacent, non-antivirus paid products such as privacy enhancement and PC optimization tools.
Avast Shares are admitted to the premium listing segment of the Official List and to trading on the Main Market for listed securities of the London Stock Exchange. Avast is also a member of the FTSE 100 index. As of the close of trading on July 14, 2021, the last business day on which Avast Shares traded on the London Stock Exchange prior to the commencement of the Offer Period (as defined below) in relation to the Merger (the “Unaffected Date”), Avast had a market capitalization of approximately £5.2 billion.
The address of Avast’s principal executive office is Pikrtova 1737/1a, 140 00 Prague 4, Czech Republic and its phone number is +44 121 415 7047.
The Merger (page 33)
Reasons for the Merger (page 42)
In evaluating the Merger, including the issuance of the New NortonLifeLock Shares to shareholders of Avast in connection with the Merger, our board of directors consulted with NortonLifeLock’s senior management, outside legal counsel and its financial advisor. In recommending that NortonLifeLock’s stockholders vote in favor of the proposal to approve the issuance of New NortonLifeLock Shares to shareholders of Avast in connection with the Merger, our board of directors considered a number of factors that it believed supported its determination as further described in the section entitled “Information About the Merger — Reasons for the Merger.”
The Rule 2.7 Announcement and the Merger (page 59)
On August 10, 2021, NortonLifeLock and Avast issued an announcement (the “Rule 2.7 Announcement”) pursuant to Rule 2.7 of the UK City Code on Takeovers and Mergers (the “UK Takeover Code”), disclosing the terms on which the boards of directors of NortonLifeLock and Avast have agreed to the recommended merger of Avast with NortonLifeLock whereby Bidco will acquire the entire issued and to be issued ordinary share capital of Avast. Under the terms of the Merger, Avast shareholders will be entitled to receive for each Avast Share held, in respect of their entire holding of Avast Shares, $7.61 in cash and 0.0302 of a New NortonLifeLock Share (such option, the “Majority Cash Option”). As an alternative to the Majority Cash Option, Avast shareholders may elect, in respect of their entire holding of Avast Shares, to receive for each Avast Share held, $2.37 in cash and 0.1937 of a New NortonLifeLock Share (such option, the “Majority Stock Option”). Avast shareholders who do not positively elect to receive the Majority Stock Option will receive the Majority Cash Option. The Merger will be implemented by means of a court-sanctioned scheme of arrangement (the “Scheme”) under the UK Companies Act, the terms and conditions of which will be set out in a document setting out the particulars of the Scheme (the “Scheme Document”). The Scheme will lapse if the Merger is not completed before the Long Stop Date.
Conditions to the Merger (page 59)
The completion of the Merger is conditional upon, among other things:

The approval of the Scheme by a majority in number of Avast shareholders present (in person or by proxy) and voting at the Court Meeting to consider and vote on the Scheme, which majority represents at least 75% in value of the Avast Shares held by such Avast shareholders;

The passing of all resolutions necessary to approve and implement the Scheme by the requisite majority of Avast shareholders present (in person or by proxy) and voting at the General Meeting or at any adjournment of that meeting;
 
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The approval of the Share Issuance Proposal by NortonLifeLock’s stockholders;

The approval of the New NortonLifeLock Shares issued pursuant to the Share Issuance Proposal for listing on Nasdaq, subject to official notice of issuance;

The receipt or waiver of applicable antitrust and regulatory approvals; and

The sanction of the Scheme by the Court (with or without modification on terms agreed by Bidco and Avast) and the delivery of a copy of the order of the Court sanctioning the Scheme to the Registrar of Companies in England and Wales.
The Co-operation Agreement (page 60)
On August 10, 2021, in connection with the Merger, NortonLifeLock entered into the Co-operation Agreement. Pursuant to the Co-operation Agreement, NortonLifeLock, Avast and Bidco agreed, among other things and subject to certain negotiated exceptions and standards, to use all reasonable endeavors to implement the Merger and to cooperate with each other in preparing required offering documents, including the Scheme Document, this proxy statement and the prospectus to be produced by NortonLifeLock and made available to Avast shareholders in respect of the New NortonLifeLock Shares (the “UK Prospectus”) and have given certain undertakings with respect to implementing the Merger.
Termination of the Co-operation Agreement (page 61)
The Co-operation Agreement contains certain customary termination rights, including, among others, and subject to certain conditions, (i) if the Avast board of directors withdraws or adversely modifies or qualifies its recommendation of the Merger (an “Avast Board Recommendation Change”), (ii) if a NortonLifeLock Board Recommendation Change (as defined below) occurs, (iii) if the Scheme is terminated, withdrawn or lapses (unless NortonLifeLock has elected to implement the Merger by way of a takeover offer, as defined in Section 974 of the UK Companies Act (a “Takeover Offer”) before such lapse, termination or withdrawal (an “Agreed Switch”)), (iv) if, prior to the Long Stop Date, a third party announces a firm intention to make an offer or revised offer for Avast which completes, becomes effective or is declared or becomes unconditional in all respects, (v) if the Scheme is not consummated by the Long Stop Date, (vi) if the Scheme is not approved by Avast shareholders at the Court Meeting and/or the relevant resolutions relating to the Scheme are not approved by the requisite majority of Avast shareholders at the General Meeting (other than in circumstances where NortonLifeLock has elected to implement the Merger by way of a Takeover Offer pursuant to an Agreed Switch) or (vii) if the requisite approval of the Share Issuance Proposal by the NortonLifeLock stockholders is not obtained at the special meeting.
Break Payments (page 62)
The Co-operation Agreement also provides that, subject to certain exceptions, (i) if either (a) a NortonLifeLock Board Recommendation Change has occurred or (b) the NortonLifeLock special meeting has not occurred prior to the Long Stop Date in breach of NortonLifeLock’s obligations under the Co-operation Agreement, NortonLifeLock will pay Avast a fee of $300,000,000, (ii) if either (a) Bidco and/or NortonLifeLock invokes (and is permitted by the Panel to invoke) any condition relating to the receipt or waiver of any applicable antitrust approvals or clearances in the United States, the United Kingdom, Germany and Spain (and/or, upon referral, approval from the European Commission), Australia and New Zealand or any condition relating to the receipt or waiver of applicable foreign investment approvals in the United States, Germany, the Czech Republic, Romania and, if in force and applicable, any such approvals required in the United Kingdom and the Netherlands (each such approval or clearance, a “Regulatory Condition”) so as to cause the Merger to lapse, to be withdrawn, or not to proceed; or (b) a Regulatory Condition has not been satisfied or waived by Bidco and/or NortonLifeLock as at the Long Stop Date, NortonLifeLock will pay Avast a fee of $200,000,000 or (iii) if NortonLifeLock stockholders do not approve the issuance of the New NortonLifeLock Shares in connection with the Merger and there has been no NortonLifeLock Board Recommendation Change, NortonLifeLock will pay Avast a fee of $100,000,000.
 
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Irrevocable Undertakings (page 68)
NortonLifeLock and Bidco have received irrevocable undertakings from each director of Avast who holds Avast Shares (in relation to beneficial holdings) and the Vlček Family Foundation (a Czech foundation associated with Ondrej Vlček, Avast’s Chief Executive Officer) (collectively, the “Supporting Shareholders”) to support the Merger. Pursuant to such undertakings, subject to certain limited exceptions, the Supporting Shareholders have agreed to vote, or procure the vote of, their entire beneficial holdings of Avast Shares in favor of the Scheme at the Court Meeting and the General Meeting or, if the Merger is implemented by way of a Takeover Offer, the Supporting Shareholders have agreed that they will accept such Takeover Offer. As of the close of business on August 9, 2021, the Supporting Shareholders beneficially owned approximately 36.93% of the existing issued ordinary share capital of Avast. In addition, pursuant to the undertakings and subject to certain exceptions therein, each of the directors of Avast who hold Avast Shares, representing in aggregate approximately 35.96% of the existing issued ordinary share capital of Avast as of the close of business on August 9, 2021, has undertaken to elect the Majority Stock Option in respect of their entire beneficial holdings of Avast Shares.
Financing (page 66)
NortonLifeLock has obtained a binding commitment pursuant to that certain Commitment Letter, dated as of August 10, 2021 (as amended and restated by that certain Amended and Restated Commitment Letter, dated as of September 1, 2021, the “Commitment Letter”), and that certain Interim Facilities Agreement, dated as of August 10, 2021 (as amended and restated by that certain Amendment and Restatement Agreement, dated as of September 1, 2021, the “Interim Facilities Agreement”), from, among others, Bank of America, N.A., BofA Securities, Inc., Wells Fargo Securities, LLC and Wells Fargo Bank, N.A. to provide (i) a $3,600 million term loan B facility, (ii) a $750 million term loan A1 facility and a $3,500 million term loan A2 facility and (iii) a $1,500 million revolving facility (collectively, the “Facilities”). The availability of the borrowings under the Commitment Letter (or if the commitments under the Commitment Letter are not funded on the closing date of the Merger, the Interim Facilities Agreement) are subject to the satisfaction of certain customary conditions for the financing of an acquisition of a public company formed under the laws of England and Wales.
Regulatory Matters (see page 66)
We cannot complete the Merger unless we obtain all required antitrust and regulatory approvals. NortonLifeLock has agreed, subject to certain exceptions, to use all reasonable endeavors in order to obtain the antitrust and regulatory clearances necessary for the Merger. These antitrust and regulatory clearances include:

the receipt or waiver of applicable antitrust approvals or clearances in the United States, the United Kingdom, Germany and Spain (and/or, upon referral, approval from the European Commission), Australia and New Zealand;

a written notification from the Committee on Foreign Investment in the United States (“CFIUS”) that it has completed action under section 721 of the United States Defense Production Act of 1950 (the “DPA”) or, if CFIUS has sent a report to the President of the United States, that the President has announced a decision not to take action or has not taken action after fifteen days from the end of the investigation period; and

the receipt or waiver of applicable foreign investment approvals in Germany, the Czech Republic, Romania and, if in force and applicable, any such approvals required in the United Kingdom and the Netherlands.
Special Meeting of NortonLifeLock Stockholders (page 29)
Date and Time (page 29)
The special meeting will be held at 9:00 a.m. (Pacific Time) on November 4, 2021, or at any adjournment or postponement thereof. The special meeting will be completely virtual and conducted via live webcast.
 
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You will be able to attend the special meeting online and submit your questions prior to or during the special meeting by visiting www.virtualshareholdermeeting.com/NLOK2021SM. You will also be able to vote your shares electronically at the special meeting. Hosting a virtual special meeting enables increased stockholder attendance and participation since stockholders can participate from any location around the world. In addition, the online format will allow us to communicate more effectively with you via a pre-meeting forum that you can enter by visiting www.virtualshareholdermeeting.com/NLOK2021SM and submit questions in advance of the special meeting.
Purpose (page 29)
You will be asked to consider and vote upon the approval of the issuance of the shares of New NortonLifeLock Shares to Avast shareholders as consideration in the Merger (which we refer to as the “Share Issuance Proposal”) and a proposal to adjourn the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of such adjournment to approve the Share Issuance Proposal (which we refer to as the “Adjournment Proposal”).
Record Date (page 29)
Only holders of record of NortonLifeLock common stock as of the close of business on October 13, 2021, the Record Date for the special meeting, are entitled to notice of, and to vote at the special meeting, or any adjournment or postponement of the special meeting. Each stockholder is entitled to cast one vote for each share of common stock owned as of the close of business on that Record Date.
Quorum (page 29)
A quorum is necessary to hold a valid meeting. A quorum will exist at the special meeting with respect to each matter to be considered at the special meeting if the holders of a majority of the shares of NortonLifeLock common stock entitled to vote at the special meeting as of the Record Date are present virtually or by proxy.
Voting of Proxies (page 30)
If you are a record holder of shares of common stock of NortonLifeLock, you may submit your proxy by telephone, via the Internet or by signing, dating and mailing your proxy card as instructed on page 30 of this proxy statement and on your proxy card. You may also vote by virtually attending the special meeting, or by sending a personal representative to the special meeting with an appropriate proxy, in order to vote.
If you are a “street name” holder of NortonLifeLock Shares and you provide your bank, broker, trust or other nominee with voting instructions on at least one of the proposals brought before the special meeting, then your shares will be counted in determining the presence of a quorum. The proposals for consideration at the special meeting are considered “non-routine” matters, and, therefore, no broker has discretion to vote on any of the proposals to be considered at the special meeting without voting instructions from the beneficial owner of the shares. If you are a “street name” holder of shares and you do not provide your bank, broker, trust or other nominee with voting instructions, then your shares will not be counted in determining the presence of a quorum.
Under the Nasdaq rules, brokers who hold shares in a “street name” for a beneficial owner typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from the beneficial owner on how to vote. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters that Nasdaq does not deem “routine.” None of the proposals to be voted on at the special meeting are routine under the Nasdaq rules. Consequently, your bank, broker, trust or other nominee will NOT have the power to vote your NortonLifeLock Shares at the special meeting unless you provide instructions to your bank, broker, trust or other nominee on how to vote on each NortonLifeLock proposal. You should instruct your bank, broker, trust or other nominee on how to vote your shares with respect to the NortonLifeLock proposals, using the instructions provided
 
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by your bank, broker, trust or other nominee. You may be able to vote by telephone or through the Internet if your bank, broker, trust or other nominee offers these options.
Vote Required (page 30)
Each of the Share Issuance Proposal and the Adjournment Proposal require the affirmative vote of the holders of a majority of the aggregate NortonLifeLock Shares represented virtually or by proxy and entitled to vote on such proposal at the special meeting. Failures to vote and broker non-votes, if any, will have no effect on the Share Issuance Proposal or the Adjournment Proposal. Votes to abstain will have the effect of a vote “against” the Share Issuance Proposal and the Adjournment Proposal. Approval of the Share Issuance Proposal is required to complete the Merger.
Common Stock Ownership of Directors and Executive Officers (page 30)
As of September 10, 2021, the directors and executive officers of NortonLifeLock held an aggregate of approximately 3.2% of the shares of our common stock entitled to vote at the special meeting. NortonLifeLock currently expects NortonLifeLock’s directors and executive officers to vote their shares in favor of the Stock Issuance Proposal and the Adjournment Proposal, but none of NortonLifeLock’s directors or executive officers have entered into any agreement obligating them to do so.
Recommendation of the NortonLifeLock Board of Directors (page 29)
Based on the reasons for the recommendations discussed below in the section entitled “Information About the Merger — Reasons for the Merger,” the members of the board of directors of NortonLifeLock determined that the Merger and the other matters contemplated by the Rule 2.7 Announcement and the Co-operation Agreement are fair to and in the best interests of NortonLifeLock and its stockholders and have authorized and approved the issuance of the New NortonLifeLock Shares to Avast shareholders in connection with the Merger. The NortonLifeLock board of directors unanimously recommends that NortonLifeLock stockholders vote FOR the Share Issuance Proposal and “FOR” the Adjournment Proposal.
Directors and Officers of NortonLifeLock Following the Merger (page 66)
Following completion of the Merger, it is intended that Avast’s Chief Executive Officer, Ondrej Vlcek, will join NortonLifeLock as President and become a member of the NortonLifeLock board of directors. In addition, Pavel Baudiš, a co-founder of Avast and current member of the Avast board of directors, is expected to join the NortonLifeLock board of directors as an independent director.
It is intended that, upon completion of the Merger, each of the non-executive members of the Avast board of directors will resign as directors of Avast.
Following completion of the Merger, it is also intended that Vincent Pilette, the Chief Executive Officer of NortonLifeLock, will be the Chief Executive Officer of the Combined Company, and Natalie Derse, the Chief Financial Officer of NortonLifeLock, will be the Chief Financial Officer of the Combined Company.
Opinion of Evercore - Financial Advisor to NortonLifeLock (page 47)
Evercore Group L.L.C. (“Evercore”) was retained by NortonLifeLock to act as its financial advisor and to render a fairness opinion in connection with the Merger. At a meeting of the NortonLifeLock board of directors held to evaluate the Merger on August 10, 2021, Evercore rendered its oral opinion, which was subsequently confirmed in writing, to the NortonLifeLock board of directors to the effect that, as of such date and based upon and subject to the various assumptions made, procedures followed, factors considered, and qualifications and limitations on the scope of the review undertaken by Evercore as set forth in its written opinion, the consideration to be paid by NortonLifeLock pursuant to the Merger documents was fair, from a financial point of view, to NortonLifeLock.
The full text of Evercore’s written opinion to the NortonLifeLock board of directors, dated August 10, 2021, is attached as Annex C to this proxy statement and is incorporated herein by reference in its entirety. NortonLifeLock stockholders should read the opinion in its entirety for a
 
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discussion of the various assumptions made, procedures followed, matters considered, and qualifications and limitations on the scope of review undertaken by Evercore in rendering its opinion. This summary is qualified in its entirety by reference to the full text of such opinion. Evercore’s opinion was directed to the NortonLifeLock board of directors and addressed only the fairness, from a financial point of view, to NortonLifeLock, as of the date of the opinion, of the consideration to be paid by NortonLifeLock pursuant to the Merger documents. Evercore’s opinion did not address any other aspects of the Merger and did not and does not constitute a recommendation to the NortonLifeLock board of directors or to any other persons in respect of the Merger, including as to how any holder of NortonLifeLock shares should vote or act in respect of the Merger.
Evercore was not asked to, nor did Evercore express any view on, and Evercore’s opinion did not address, any other term or aspect of the Merger documents or the Merger, including, without limitation, the structure or form of the Merger, or any term, aspect or undertaking of any other agreement or instrument contemplated by the Co-operation Agreement or entered into or amended in connection with the Co-operation Agreement. Evercore assumed that any modification to the structure of the Merger would not vary in any respect material to Evercore’s analysis. Evercore’s opinion did not address the relative merits of the Merger as compared to other business or financial strategies that might be available to NortonLifeLock, nor did it address the underlying business decision of NortonLifeLock to engage in the Merger. We encourage you to read Evercore’s opinion carefully and in its entirety. The summary of the Evercore opinion set forth herein is qualified in its entirety by reference to the full text of the opinion attached as Annex C to this proxy statement.
Interests of Certain NortonLifeLock Directors and Executive Officers in the Merger (page 67).
NortonLifeLock’s directors and executive officers may have interests in the Merger that are different from, or in addition to, the interests of NortonLifeLock’s stockholders generally. The Merger does not constitute a “change in control” under any compensation or benefit plans, programs or arrangements of NortonLifeLock and NortonLifeLock’s directors and named executive officers are not entitled to any additional compensation or benefits that relate to or are contingent upon the Merger. However, NortonLifeLock’s directors and executive officers will continue to serve on the board of directors of directors and as executive officers of the Combined Company, respectively. The members of the NortonLifeLock’s board of directors of directors were aware of and considered these interests in evaluating and negotiating the Co-operation Agreement and approving the Merger and in determining to recommend to NortonLifeLock stockholders that they adopt the Co-operation Agreement.
These interests are described in more detail in the section entitled “Information About the Merger — Interests of Certain NortonLifeLock Directors and Executive Officers in the Merger” beginning on page 67.
United States Federal Income Tax (page 68)
Our stockholders will not realize gain or loss in connection with the Merger with respect to their NortonLifeLock Shares for United States federal income tax purposes.
No Appraisal or Dissenters’ Rights (page 68)
No appraisal or dissenters’ rights are available to the holders of NortonLifeLock common stock in connection with the Merger.
Impact of the Share Issuance Proposal on our Existing Stockholders (page 35)
If the Share Issuance Proposal is approved and the share issuance is implemented, the share issuance will dilute the ownership and voting interests of our existing stockholders. Avast shareholders will be entitled to receive for each Avast Share held, in respect of their entire holding of Avast Shares, $7.61 in cash and 0.0302 of a New NortonLifeLock Share (such option, the “Majority Cash Option”). As an alternative to the Majority Cash Option, Avast shareholders may elect, in respect of their entire holding of Avast Shares, to receive for each Avast Share held, $2.37 in cash and 0.1937 of a New
 
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NortonLifeLock Share (such option, the “Majority Stock Option”). Upon completion of the Merger, and subject to the elections made by Avast shareholders, Avast shareholders will own between approximately 14% (if all Avast shareholders, other than the Avast directors who hold Avast Shares, receive the Majority Cash Option) and approximately 26% (if all Avast shareholders elect for the Majority Stock Option) of the Combined Company.
Depending on the level of elections made by Avast shareholders for the Majority Stock Option, and subject to market conditions and other capital requirements, the Company intends to implement an incremental share buyback program over time following completion of the Merger (the “Post-Merger Buyback”). If all Avast shareholders elect for the Majority Stock Option, the Company expects that the amount of the Post-Merger Buyback program, if implemented, would be up to approximately $3 billion. However, this amount would be reduced by the amount of any incremental cash consideration payable to Avast shareholders who receive the Majority Cash Option. The Post-Merger Buyback is incremental to Nortonlifelock’s current share buyback program of approximately $1.8 billion, enabling a total potential buyback program of up to approximately $4.8 billion.
 
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CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This proxy statement and the documents to which NortonLifeLock refers you to in this proxy statement, as well as oral statements made or to be made by NortonLifeLock, include forward-looking statements, which are subject to safe harbors under the Securities Act of 1933, as amended (the “Securities Act”) and the Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include references to our ability to utilize our deferred tax assets, as well as statements including words such as “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “goal,” “intent,” “momentum,” “projects,” and similar expressions. In addition, other characterizations of future events or circumstances that are forward-looking statements include:

projections of our future financial performance;

anticipated growth and trends in our businesses and in our industries;

the risk that the Merger is not completed on a timely basis or at all;

the ability to integrate Avast into our business successfully and the amount of time and expense spent and incurred in connection with the integration;

the risk that we or Avast may be unable to obtain antitrust or other regulatory approvals required for the Merger, or that required antitrust or other regulatory approvals may delay the Merger or result in the need to take curative actions or the imposition of conditions that could adversely affect the operations of the Combined Company or cause the parties to abandon the Merger;

the risk that the economic benefits and other synergies that we anticipate as a result of the Merger are not fully realized or take longer to realize than expected;

adverse effects on the market price of our common stock and on our operating results because of a failure to complete the Merger;

the outcome or impact of pending litigation, claims or disputes;

plans for and anticipated benefits of our solutions;

matters arising out of the ongoing SEC investigation;

the impact of the COVID-19 pandemic on our business operations and target markets; and

other risks and uncertainties indicated in this proxy statement, including those set forth in the section entitled “Risk Factors,” beginning on page 18.
Forward-looking statements are only predictions, based on our current expectations about future events and may not prove to be accurate. We do not undertake any obligation to update any forward-looking statements to reflect events occurring or circumstances arising after the date of this report. Forward-looking statements involve risks and uncertainties, and our actual results, performance, or achievements could differ materially from those expressed or implied by the forward-looking statements on the basis of several factors.
For further discussion of these and other risks, contingencies and uncertainties applicable to NortonLifeLock, see the section entitled “Risk Factors” beginning on page 18 and in NortonLifeLock’s other filings with the SEC incorporated by reference into this proxy statement. See also the section entitled “Where You Can Find Additional Information” beginning on page 123 for more information about the SEC filings incorporated by reference into this proxy statement.
 
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RISK FACTORS
In deciding whether to vote in favor of the Share Issuance Proposal, you are urged to carefully consider all of the information included or incorporated by reference in this proxy statement, which is listed in the section entitled “Where You Can Find Additional Information” beginning on page 123. You should also read and consider the risks associated with the Merger and each of the businesses of NortonLifeLock (“our” or “we”) and Avast because these risks will affect the Combined Company.
Risks Related to the Merger
NortonLifeLock may fail to consummate the Merger or may not consummate it on the terms described herein.
It is currently anticipated that the Merger will be consummated in mid-2022. Completion of the Merger is subject to, among other things, the receipt of applicable shareholder approvals by each of Avast’s shareholders and NortonLifeLock’s shareholders, regulatory approvals and other customary closing conditions for the acquisition of a UK public company. As a result, the possible timing and likelihood of completion are uncertain, and, accordingly, there can be no assurance that the Merger will be completed on the expected terms, on the anticipated schedule or at all.
The NortonLifeLock Group may fail to realize the anticipated benefits and operating synergies expected from the Merger, which could adversely affect its business, financial condition and operating results.
The success of the Merger will depend, in significant part, on our ability to successfully integrate the Avast Group, grow the revenue of the Combined Company and realize the anticipated strategic benefits and synergies from the combination. We believe that the addition of the Avast Group represents an attractive opportunity to create a new, industry leading consumer cyber safety business, leveraging the established brands, technical expertise and innovation of both groups to deliver substantial benefits to consumers, shareholders and other stakeholders. Achieving these goals requires growth of the revenue of the Combined Company and realization of the targeted synergies expected from the Merger. This growth and the anticipated benefits of the transaction may not be realized fully or at all, or may take longer to realize than we expect. Actual operating, technological, strategic and revenue opportunities, if achieved at all, may be less significant than we expect or may take longer to achieve than anticipated. If we are not able to achieve these objectives and realize the anticipated benefits and synergies expected from the Merger within a reasonable time, our business, financial condition and operating results may be adversely affected.
The Merger will result in significant integration costs and any material delays or unanticipated additional expenses may harm our business, financial condition and results of operations.
The complexity and magnitude of the integration effort associated with the Merger are significant and require that we fund significant capital and operating expenses to support the integration of the combined operations. Such expenses have included significant transaction, consulting and third party service fees. We have incurred and expect to continue to incur additional operating expenses as we build up internal resources or engage third party providers while we integrate the Combined Company following the Merger. In addition to these transition costs, we have incurred and expect to continue to incur increased expenses relating to, among other things, restructuring. Any material delays, difficulties or unanticipated additional expenses associated with integration activities may harm our business, financial conditions and results of operations.
We may not be able to integrate the Avast Group into the Combined Company successfully.
Our Merger with the Avast Group involves the integration of two businesses that previously operated independently. The integration of the departments, systems, business units, operating procedures and information technologies of the two businesses will present a significant challenge to management. There can be no assurance that we will be able to integrate and manage these operations effectively. The failure to successfully integrate the two businesses in a timely manner, or at all, could have an
 
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adverse effect on our business, financial condition and results of operations. The difficulties of combining the NortonLifeLock Group with the Avast Group include:

the necessity of coordinating geographically separated organizations;

implementing common systems and controls;

integrating personnel with diverse business backgrounds;

the challenges in developing new products and services that optimize the assets and resources of the two businesses;

integrating the businesses’ technology and products;

combining different corporate cultures;

unanticipated expenses related to integration, including technical and operational integration;

increased fixed costs and unanticipated liabilities that may affect operating results;

retaining key employees; and

retaining and maintaining relationships with existing customers, distributors and other partners.
Also, the process of integrating operations could cause an interruption of, or loss of momentum in, the activities of one or both of us and the Avast Group. The diversion of management’s attention and any delays or difficulties encountered in connection with the integration of the operations could have an adverse effect on our business, financial condition and results of operations.
The Merger may expose us to significant unanticipated liabilities that could adversely affect our business, financial condition and results of operations.
The Merger with the Avast Group may expose us to significant unanticipated liabilities relating to the operation of the Combined Company. These liabilities could include employment or severance-related obligations under applicable law or other benefits arrangements, legal claims, warranty or similar liabilities to customers, and claims by or amounts owed to vendors. Particularly in international jurisdictions, our Merger of Avast, or our decision to independently enter new international markets where the Avast Group previously conducted business, could also expose us to tax liabilities and other amounts owed by the Avast Group. The incurrence of such unforeseen or unanticipated liabilities, should they be significant, could have a material adverse effect on our business, financial condition and results of operations.
The additional scale of the Avast Group’s operations, together with the complexity of the integration effort, including changes to or implementation of critical information technology systems, may adversely affect our ability to report our financial results on a timely basis. In addition, we will have to train new employees and third party providers, and assume operations in jurisdictions where we have not previously had operations. We expect that the Merger may necessitate significant modifications to our internal control systems, processes and information systems, both on a transition basis and over the longer-term as we fully integrate the Combined Company. Due to the complexity of the Merger, we cannot be certain that changes to our internal control over financial reporting will be effective for any period, or on an ongoing basis. If we are unable to accurately report our financial results in a timely manner, or are unable to assert that our internal controls over financial reporting are effective, our business, financial condition and results of operations and the market perception thereof may be materially adversely affected.
Certain of Avast’s agreements may contain change of control provisions which, if not waived, would have material adverse effects on the Combined Company.
Agreements with change of control provisions typically provide for or permit the termination of the agreement upon the occurrence of a change of control of one of the parties which can be waived by the relevant counterparties. There can be no assurance that such consent will be obtained at all or on favorable terms, and as of the date of this document no such waivers have been sought or obtained. The
 
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inability to obtain waivers from more than one relevant counterparty could have a material adverse effect on the Combined Company.
NortonLifeLock will be subject to certain contractual restrictions while the Merger is pending.
The Co-operation Agreement restricts NortonLifeLock from making certain divestitures, repurchasing securities outside of existing equity award programs and in connection with its current convertible notes, making distributions other than the Agreed NortonLifeLock Dividends (as defined below) and taking other specified actions until the earlier of the completion of the Merger or the termination of the Co-operation Agreement without the consent Avast (not to be unreasonably withheld, conditioned or delayed). These restrictions, although limited in scope, could impact NortonLifeLock’s operations and actions. Adverse effects arising from the pendency of the Merger could therefore be exacerbated by any delays in consummation of the Merger.
The unaudited pro forma financial information included in the proxy statement may not be an indication of the Combined Company’s financial condition or results of operations following the transaction.
The unaudited pro forma financial information contained in the proxy statement is intended to illustrate the effect of the proposed Merger. The pro forma financial statements have been derived from (i) the unaudited consolidated financial statements for the three months ended July 2, 2021 and the audited consolidated financial statements of NortonLifeLock for the year ended April 2, 2021, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and are incorporated by reference into the proxy statement and (ii) the unaudited consolidated financial statements for the six months ended June 30, 2021 and the audited consolidated financial statements of Avast for the year ended December 31, 2020, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), each of which is included elsewhere in this proxy statement. For the purposes of the preparation of the pro forma financial information, the operational results of Avast for the three months ended June 30, 2021 have been derived from the unaudited consolidated financial statements for the six months ended June 30, 2021.The financial information from these Avast consolidated financial statements has been converted to U.S. GAAP, restated using NortonLifeLock’s accounting policies for the purposes of presentation in the unaudited pro forma financial information. The historical consolidated financial information has been adjusted in the pro forma financial statements to give effect to pro forma events that are (1) directly attributable to the Merger and related transactions, (2) factually supportable and (3) with respect to the unaudited pro forma condensed combined statements of income, expected to have a continuing effect on the combined results of NortonLifeLock and Avast. The information upon which these adjustments and assumptions has been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with accuracy. Moreover, the pro forma financial information does not reflect all costs that are expected to be incurred by the Combined Company in connection with the transaction. For these and other reasons, the actual business, financial condition and results of operations of the Combined Company following the transaction may not be consistent with, or evident from, this pro forma financial information.
The assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect the Combined Company’s business, financial condition or results of operations following the transaction. Any decline or potential decline in the Combined Company’s business, financial condition or results of operations may cause significant variations in NortonLifeLock’s share price.
Stockholders in the Combined Company will be more exposed to currency exchange rate fluctuations as, following completion of the Merger, there will be an increased proportion of assets, liabilities and earnings denominated in foreign currencies.
As a result of the Merger, the financial results of the Combined Company will be more exposed to currency exchange rate fluctuations and an increased proportion of assets, liabilities and earnings will be denominated in non-U.S. Dollar currencies. The Combined Company will present its financial
 
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statements in U.S. Dollars and will have a significant proportion of net assets and income in non-U.S. Dollar currencies. The Combined Company’s financial condition and results of operation will therefore be sensitive to movements in foreign exchange rates. A depreciation of non-U.S. Dollar currencies relative to the U.S. Dollar could have an adverse impact on the Combined Company’s financial results.
Antitrust laws restrict NortonLifeLock’s ability to coordinate with Avast on certain matters.
To the extent that Avast needs to renegotiate any material commercial contracts before completion of the Merger, antitrust laws prevent NortonLifeLock from coordinating with Avast regarding such renegotiations and, while Avast will negotiate in its shareholders’ best interests, factors outside of Avast’s control may cause such renegotiations to result in a negative impact to Avast’s business or our view of the business of the Combined Company.
The Merger is subject to various closing conditions, including governmental, regulatory and shareholder approvals, as well as other uncertainties, and there can be no assurances as to whether or when it may be completed. Failure to consummate the Merger could negatively impact our stock price and our future business and financial results.
The consummation of the Merger is subject to certain conditions. A number of the conditions are not within our control, and it is possible that such conditions may prevent, delay or otherwise materially adversely affect the completion of the Merger. These conditions include, among other things: (i) the approval of the Scheme by the Avast shareholders at the Court Meeting and the General Meeting, (ii) the approval of the Share Issuance Proposal, (iii) the receipt of applicable antitrust and regulatory approvals, (iv) the sanction of the Scheme by the Court and (v) Nasdaq having authorized the listing of the New NortonLifeLock Shares.
No assurance can be given that all of the conditions to the Merger will be satisfied, or if they are, as to the timing of such satisfaction. If the conditions to the Merger are not satisfied, then the Merger may not be consummated. If the Merger does not receive, or timely receive, the required approvals and clearances, or if another event occurs that delays or prevents the Merger, such delay or failure to complete the Merger and the Merger process may cause uncertainty or other negative consequences that may materially and adversely affect our business, financial condition and results of operations and, to the extent that the current price of our shares reflects an assumption that the Merger will be completed, the price per share of NortonLifeLock could be negatively impacted.
The Merger is subject to the receipt of governmental and regulatory approvals that may impose conditions that could have an adverse effect on the NortonLifeLock Group or, if not obtained, could prevent consummation of the Merger.
Consummation of the Merger is conditioned upon the receipt of certain governmental approvals and/or the expiration of regulatory waiting periods. There can be no assurance that these approvals will be obtained. In addition, the governmental authorities from which the regulatory approvals are required may impose conditions on the consummation of the Merger or require changes to the terms of the Merger or agreements to be entered into in connection with the Merger. Such conditions or changes and the process of obtaining regulatory approvals could have the effect of delaying or impeding consummation of the Merger or of imposing additional costs or limitations on the NortonLifeLock Group following consummation of the Merger, any of which might have an adverse effect on the NortonLifeLock Group’s business, financial condition and results of operations.
In certain circumstances, NortonLifeLock may not be able to invoke a condition to the Merger so as to terminate the Merger, which could reduce the value of NortonLifeLock’s common stock.
The UK Takeover Code provides that certain conditions may only be invoked where the circumstances underlying the failure of the condition are of material significance to NortonLifeLock in the context of the Merger. Therefore, with the exceptions of conditions relating to: (1) the approval of the Scheme by Avast shareholders and the Court; (2) the sanction of the Scheme by the Court; (3) the approval of the New NortonLifeLock Shares by its shareholders; and/or (4) the listing of New NortonLifeLock Shares on Nasdaq, NortonLifeLock will be required to obtain the consent of the Panel to invoke a condition which
 
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would cause the Merger not to proceed, to lapse or to be withdrawn. The Panel will normally only give such consent if the circumstances giving rise to the right to invoke a condition to the Merger are of material significance to NortonLifeLock in the context of the Merger, which would be judged by reference to the facts at the time that the relevant circumstances arise.
If, for example, a material adverse change affecting Avast occurs and the Panel does not allow NortonLifeLock to invoke a condition to cause the Merger not to proceed, the market price of NortonLifeLock’s common stock may decline or NortonLifeLock’s business or financial condition may be materially adversely affected. As a result, the value of the New NortonLifeLock Shares received by Avast shareholders may be reduced and/or NortonLifeLock’s business or financial condition may be adversely affected after the Merger.
The UK Takeover Code may limit NortonLifeLock’s ability to cause Avast to consummate the Merger and may otherwise limit the relief NortonLifeLock may obtain if the Avast directors withdraw their support of the Scheme.
The UK Takeover Code limits the contractual commitments that could be obtained from Avast to take actions in furtherance of the Merger, and the Avast directors may, if their fiduciary and other directors’ duties so require, withdraw their recommendation in support for the Scheme, and withdraw the Scheme itself, at any time before the Court Meeting. The UK Takeover Code does not permit Avast to pay any break fee if it does so, nor can it be subject to any restrictions on soliciting or negotiating other offers or transactions involving Avast other than restrictions against undertaking actions or entering into agreements which are similar to or have a similar effect to “poison pills” which might frustrate the Merger. However, NortonLifeLock may be required to pay a Break Payment of up to $300 million under the Co-operation Agreement.
Avast currently is not subject to the internal controls and other compliance obligations of the U.S. securities laws, and NortonLifeLock may not be able to timely and effectively implement controls and procedures over Avast operations as required under the U.S. securities laws.
Avast currently is not subject to the information and reporting requirements of the Exchange Act and other U.S. federal securities laws, including the compliance obligations relating to, among other things, the maintenance of a system of internal controls as contemplated by the Exchange Act. Subsequent to the completion of the Merger, NortonLifeLock will need to timely and effectively implement the internal controls necessary to satisfy those requirements, which require annual management assessments of the effectiveness of internal control over financial reporting and a report by an independent registered public accounting firm addressing these assessments. NortonLifeLock intends to take appropriate measures to establish or implement an internal control environment at Avast aimed at successfully fulfilling these requirements. However, it is possible that NortonLifeLock may experience delays in implementing or be unable to implement the required internal financial reporting controls and procedures, which could result in enforcement actions, the assessment of penalties and civil suits, failure to meet reporting obligations and other material and adverse events that could have a negative effect on the market price for NortonLifeLock’s Shares.
Following completion of the Merger, the NortonLifeLock Group’s international operations will be subject to the laws and regulations of the United States and many foreign countries. Failure to comply with these laws may affect our ability to conduct business in certain countries and may affect our financial performance.
The NortonLifeLock Group and the Avast Group are, and, following completion of the Merger, will be, subject to a variety of laws regarding its international operations, including the U.S. Foreign Corrupt Practices Act, the UK Bribery Act and regulations issued by U.S. Customs and Border Protection, the U.S. Bureau of Industry and Security, and the regulations of various foreign governmental and regulatory agencies. NortonLifeLock cannot predict the nature, scope or effect of future regulatory requirements to which its international operations might be subject or the manner in which existing laws might be administered or interpreted. In addition, actual or alleged violations of these laws could result in enforcement actions and financial penalties that could result in substantial costs. The occurrence of
 
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any of the foregoing could have a material and adverse effect on NortonLifeLock’s business, financial condition and results of operations.
Future changes to U.S. and non-U.S. tax laws could adversely affect the effective tax rate of the Combined Company.
The effective tax rate of the Combined Company could be adversely affected by several factors, many of which are outside of our control, including:

Changes to the U.S. federal income tax laws affecting the taxation of business entities under the new Biden Administration, including the potential for an increase in the corporate income tax rate, the potential for an increase in the tax rate applicable to the global intangible low-taxed income and elimination of certain exemptions with respect thereto, and the imposition of minimum taxes or surtaxes on certain types of income;

Changes to other tax laws, regulations, and interpretations in multiple jurisdictions in which NortonLifeLock and its affiliates do business, including actions resulting from the Organisation for Economic Co-operation and Development’s base erosion and profit shifting project (including situations where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates), proposed actions by international bodies such as digital services taxation, as well as the requirements of certain tax rulings;

Changes in the relative proportions of revenues and income before taxes in the various jurisdictions in which NortonLifeLock and its affiliates do business that have differing statutory tax rates;

The tax effects of significant infrequently occurring events that may cause fluctuations between reporting periods;

Tax assessments, or any related tax interest or penalties, that could significantly affect our income tax expense for the period in which the settlements take place; and

Taxes arising in connection to changes in our workforce, corporate entity structure or operations as they relate to tax incentives and tax rates.
The tax laws in the United States, the UK and other countries in which NortonLifeLock and its affiliates do business could change on a prospective or retroactive basis, and any such changes could adversely affect NortonLifeLock and its affiliates (including NortonLifeLock and its affiliates after the Merger).
The likelihood of any changes to U.S. and non-U.S. tax law being enacted or implemented is unclear. The NortonLifeLock Group is currently unable to predict whether such changes will occur or in what form and, if so, the ultimate impact on the effective tax rate of NortonLifeLock Group’s business or, following the Merger, the business of the Combined Company. The NortonLifeLock Group and the Avast Group are and, after the Merger, the Combined Company will be, dependent on key management personnel and may face challenges in attracting and retaining individuals with specialized skills and experience.
The NortonLifeLock Group’s and the Avast Group’s success is and, following the Merger, the Combined Company’s success will be, largely dependent upon the performance and retention of their key management, finance, sales, marketing and technology personnel. As competition for highly skilled management, finance, sales, marketing and technology personnel is intense, any inability to retain employees, key members of NortonLifeLock, Avast and, following the Merger, the Combined Company’s executive management team, and to attract and retain key employees, in particular those who have subject-matter expertise and institutional knowledge and the necessary skills critical to their operations and the implementation of their strategy, may have a material adverse effect upon NortonLifeLock, Avast and, following the Merger, the Combined Company’s business, prospects, revenues, operating results and financial condition. Failure to attract and retain such individuals within the NortonLifeLock Group, Avast or the Combined Company may put additional stress and pressure on business functions which may impact operational performance, financial reporting, business oversight, supply chain oversight and compliance with laws.
 
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In order to close the Merger, NortonLifeLock will need to incur a significant level of debt that could have important consequences for its business and any investment in NortonLifeLock securities.
NortonLifeLock and certain other parties including Bank of America, N.A. as Interim Facility Agent and as Interim Security Agent, entered into the Interim Facilities Agreement, pursuant to which the Interim Lenders agreed to provide NortonLifeLock with (i) a $3,600 million term loan interim facility B (“Interim Facility B”), (ii) $750 million term loan interim facility A1 (“Interim Facility A1”) and $3,500 million term loan interim facility A2 (“Interim Facility A2”), and (iii) a $1,500 million interim revolving facility (“Interim Revolving Facility”) (collectively, the “Interim Facilities”) in order to, among other things, finance the cash consideration payable by NortonLifeLock in connection with the Merger. Such indebtedness could have significant consequences for the Combined Company’s business and any investment in our securities, including:

increasing the Combined Company’s vulnerability to adverse economic, industry or competitive developments;

requiring a substantial portion of the Combined Company’s cash flows from operations to be dedicated to the payment of principal and interest on its indebtedness, therefore reducing the Combined Company’s ability to use its cash flow to fund its operations, capital expenditures and future business opportunities and returning cash to NortonLifeLock’s shareholders;

restricting the Combined Company from making strategic acquisitions or causing it to make non-strategic divestitures;

limiting the Combined Company’s ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes; and

limiting the Combined Company’s flexibility in planning for, or reacting to, changes in its business or market conditions and placing it at a competitive disadvantage compared to the Combined Company’s competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that the Combined Company’s leverage prevents it from exploiting.
NortonLifeLock shareholders will be diluted by the Merger.
The merger will dilute the current ownership position of NortonLifeLock shareholders and result in NortonLifeLock shareholders having an ownership stake and voting interest in the Combined Company that is smaller than their current stake in NortonLifeLock. Upon completion of the Merger, and subject to the elections made by Avast shareholders, Avast shareholders will own between approximately 14% (if all Avast shareholders, other than the Avast directors who hold Avast Shares, receive the Majority Cash Option) and approximately 26% (if all Avast shareholders elect for the Majority Stock Option) of the Combined Company. Consequently, NortonLifeLock shareholders, as a general matter, will have less influence over the management and policies of the Combined Company after the effective time of the Merger than they currently exercise over the management and policies of NortonLifeLock.
The fraction of a New NortonLifeLock Share that Avast shareholders will receive for each Avast Share in connection with the Merger will be based on a fixed exchange ratio, which will not be adjusted to reflect changes in the market value of shares of NortonLifeLock common stock or Avast Shares prior to the consummation of the Merger.
The fraction of a New NortonLifeLock Share that Avast shareholders will receive for each Avast Share will be a fixed number based on a fixed exchange ratio (in the case of Avast shareholders receiving the Majority Cash Option, an exchange ratio of 0.0302 of a New NortonLifeLock Share for each Avast Share and in the case of Avast shareholders electing to receive the Majority Stock Option, an exchange ratio of 0.1937 of a New NortonLifeLock Share for each Avast Share). This fixed exchange ratio will not adjust in the event that the market price of shares of NortonLifeLock common stock increases relative to the value of Avast Shares. Share price changes may result from a variety of factors, including changes in the business, operations or prospects of NortonLifeLock or Avast, the timing of the Merger, regulatory considerations, general market and economic conditions and other factors.
 
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The Co-operation Agreement limits NortonLifeLock’s ability to pursue alternatives to the Merger.
The Co-operation Agreement contains “non-solicit” covenants that restrict NortonLifeLock’s ability to enter into or participate in any discussions with any person concerning any acquisition proposal or provide any information to any person relating to any acquisition proposal, subject to certain exceptions. Furthermore, if NortonLifeLock is permitted, pursuant to the specified exceptions in the Co-operation Agreement, to change its recommendation in favor of the Share Issuance Proposal, NortonLifeLock may have to pay to Avast a Break Payment of $300,000,000. These provisions could discourage a potential third-party acquirer that might have an interest in acquiring all or a significant portion of NortonLifeLock from considering or proposing that acquisition.
Risks Relating to the NortonLifeLock Group’s Business
NortonLifeLock’s business will continue to be subject to the risks described in the sections entitled “Risk Factors” in NortonLifeLock’s Annual Report on Form 10-K for the fiscal year ended April 2, 2021, and in other documents incorporated by reference into this proxy statement. See the section entitled “Where You Can Find Additional Information” beginning on page 123 for the location of information incorporated by reference into this proxy statement.
Risks Related to the Avast Group’s Business
The data Avast stores, such as customer data and the systems that store, manage and process this data could become compromised.
The Avast Group’s data and systems risk has increased as a result of higher levels of online activity during COVID-19 as well as due to increased cyber disruption and threats.
Failure to protect the data Avast stores and the systems that store this data could:

have a material adverse impact on its reputation, its ability to provide services and updates, potentially resulting in a material decline in its user base;

result in increased litigation (including class actions), investigations, fines and censure by governmental and regulatory bodies, resulting in negative financial consequences; and

impact management time and resources.
The spread of COVID-19 on a global scale has led to the imposition of governmental controls on the movement of people with the associated cessation of large parts of the economy for a significant period of time.
The global pandemic brings a considerable level of uncertainty in terms of the potential widespread economic downturn and/or Avast employees’ ability to continue working. The low level of business activity and reduced customer demand can lead to reduced revenues which may impact the liquidity and ultimately solvency of Avast’s business. Key employees or a large proportion of Avast employees might not be able to continue to work or be deployed where they are needed.
The Avast Group is subject to evolving sanctions laws as well as governmental export controls, and any breaches of such laws could subject the Avast Group to fines or other forms or criminal or administrative penalties, as well as reputational damage.
The Avast Group is subject to complex export control and economic sanctions laws in the jurisdictions where it operates, including the United States, the European Union and the United Kingdom. Economic sanctions laws prohibit most dealings with listed persons, entities or bodies designated under the applicable sanctions regime, and restrict or prohibit certain business activities in certain sanctioned territories (notably, in respect of U.S. sanctions, Cuba, Iran, North Korea, Syria and the Ukrainian territory of Crimea). Export control laws impose controls, export license requirements and restrictions on the export of certain items, including software, and technology, such as encryption software and VPNs.
 
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There is a risk that, despite the procedures and controls that the Avast Group and certain of its key suppliers or outsourced service providers implement to prevent breaches of sanctions and export control laws, sanctioned persons or users in sanctioned territories could download and use the Avast Group’s products in breach of applicable sanctions or export control laws. Such downloads and exports could have negative consequences for the Avast Group, including government investigations, fines and other forms of criminal or administrative penalties and reputational damage, to the extent that the Avast Group’s ongoing compliance efforts and remedial actions taken to prevent further persons from accessing its products in breach of sanctions are ineffective.
Actual, possible or perceived defects, disruptions or vulnerabilities in the products, solutions or cloud infrastructure of the Avast Group and its key suppliers or outsourced service providers, including risks from security attacks, which may lead to negative publicity, damage to the Avast Group’s reputation, and/or cause a decline in revenues and profits.
The Avast Group’s software is inherently complex and may contain material defects, errors or vulnerabilities that may cause it to fail to perform in accordance with user expectations. As may happen to any vendor of software, end users may find errors, failures and bugs in some new offerings after their initial distribution, particularly given that end users may deploy such products in computing environments with operating systems, software and/or hardware different than those in which the Avast Group tests products before release. In addition, certain of the Avast Group’s products operate in conjunction with third party systems which may contain vulnerabilities that the Avast Group fails to remedy.
The Avast Group has been, and may continue to be, the target of hackers’ intentional spam attacks on its email addresses and denial of service and other sophisticated attacks on its websites, mail system, network cloud infrastructure and firewalls. The Avast Group has a number of key suppliers and outsourced service providers, which may also be the target of such attacks. Such attacks may result in security breaches, disruption or damage to users’ computers or networks and theft of confidential information or other negative consequences. This may result in negative publicity, damage to the Avast Group’s brands, withdrawals from contracts, loss of or delay in market acceptance of the Avast Group’s products, loss of competitive position or claims by users or others against the Avast Group. While the Avast Group deploys sophisticated physical and electronic security protections and policies, procedures and protocols to protect against attacks and to help identify suspicious activity, no system or combination of systems can provide a guarantee of protection. If these intentionally disruptive efforts are, or the market perceives them to be, successful, the Avast Group may face legal liability and these efforts could adversely affect the Avast Group’s activities or harm its reputation, brand and future sales.
Furthermore, security software products and solutions may falsely identify programs or websites as malicious or otherwise undesirable (i.e., false positives). These “false positives” may impair the perceived reliability of the Avast Group’s services and may therefore harm its market reputation. Also, the Avast Group’s anti-spam and anti-spyware services may falsely identify emails or programs as unwanted spam or potentially unwanted programs, or alternatively fail to properly identify unwanted emails or programs, particularly as hackers often design spam emails or spyware to circumvent internet security software. Parties whose programs are incorrectly blocked by these products or solutions, or whose websites are incorrectly identified as unsafe or malicious, may seek redress against the Avast Group for labelling them as malicious and interfering with their businesses. In addition, false identification of emails or programs as unwanted spam or potentially unwanted software may reduce the popularity and adoption of the Avast Group’s services. Moreover, these false positives may render a device’s entire operating system unusable and disrupt or damage users’ devices. Alleviating any of these problems could require significant expenditures of capital and other resources and could cause interruptions, delays, or cessation of product licensing, which could result in the loss of both existing and potential users and could materially and adversely affect the Avast Group’s results of operations. In addition, the Avast Group could face claims for product liability, tort, breach of warranty or damages caused by faulty installation of, or defects in, its products. In the event of claims, provisions in contracts relating to warranty disclaimers and liability limitations may be unenforceable. Defending a lawsuit, regardless of its merit, could be costly and divert management attention.
 
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A significant portion of the Avast Group’s users could stop using its products or switch to competing products in any given period.
To continue to maintain its user base, the Avast Group must retain existing users to the extent possible and continuously attract new users to replace those who exit the Avast Group’s user base. If the Avast Group does not offer products and services that appeal to users, its free user base may materially decline, and/or the Avast Group will fail to monetize its products and services, this will impact its business model viability. Avast revenues, competitive position and reputation could be materially and adversely affected if its new products and product upgrades fail to achieve widespread acceptance and do not appeal to users.
The Avast Group operates in a highly competitive environment and may not be able to compete successfully.
The consumer security industry is becoming more competitive and complex, in particular there is a progressive advancement of Microsoft’s Windows Defender antivirus solution. Technological developments from current and new competitors can develop quickly and disrupt the market. Current and new competitors may limit access to standard product interfaces and thereby inhibit Avast’s ability to develop products on their platforms. An increase in competition could result in lost business, reduced revenue and reduced profitability impacting Avast’s future financial and operational performance. New entrants into the security software industry, including those in emerging markets, may become Avast’s direct competitors and erode its market share. Avast’s results of operations will be materially and adversely affected if its competitors succeed in marketing products with better performance, functionality or at lower prices than its products. This may also have an impact on Avast’s reputation in the market.
The Avast Group operates in a number of jurisdictions with strict consumer laws and regulations, and any failure to comply with such laws and regulations may adversely affect its business.
A wide variety of local, national and international laws and regulations apply to consumer businesses such as the Avast Group’s, including the collection, use, retention, protection, disclosure, transfer and other processing of personal data. These consumer compliance laws and regulations, such as those related to personal data and privacy, are evolving and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions. Failure to comply with applicable laws and regulations, or to protect such data, could result in enforcement action, including fines, imprisonment of company officials and public censure, claims for damages by users and other affected individuals, damage to reputation and loss of goodwill (both in relation to existing users and prospective users). Any of these consequences could have a material adverse effect on the Avast Group’s operations, financial performance and prospects. The Avast Group operates globally and must continue to monitor changes to, understand and comply with the relevant laws in each jurisdiction. Furthermore, the Avast Group must rely on its third-party partners, over whom it has no control, to also comply with such laws and regulations. The failure to comply with any consumer laws and regulations in any jurisdiction could have a material adverse effect on the Avast Group’s financial condition, financial returns or results of operations.
The Avast Group may become subject to claims of intellectual property infringement by third parties that, regardless of merit, could result in litigation and materially adversely affect its business, results of operations or financial condition.
The Avast Group’s success largely depends on its ability to use and develop its technology without infringing the intellectual property rights of third parties, including patents, copyrights, trade secrets and trademarks. The Avast Group may be subject to litigation involving claims of patent infringement or violation of other intellectual property rights of third parties. The Avast Group has also in the past, and expects in the future, to be the target of so-called “patent trolls”, companies that do not manufacture or sell products and whose sole activity is to assert patent rights against accused infringers in an attempt to collect licensing fees. In addition, the Avast Group licenses and utilizes certain third party “proprietary” and “open source” software as part of its solutions offering. An author or another third party that distributes such third party or open source software could allege that the Avast Group had
 
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not complied with the conditions of one or more of these licenses. Any such claims, regardless of merit, could: (1) result in litigation, which could result in substantial expenses; (2) divert the attention of management; (3) cause significant delays; (4) materially disrupt the conduct of the business; and (5) have a material and adverse effect on the Avast Group’s financial condition and results of operations. As a consequence of such claims, the Avast Group could be required to pay substantial damages, develop non-infringing technology, enter into royalty-bearing licensing agreements, stop selling some or all of its products or re-brand certain products. If it appears necessary, the Avast Group may seek to license the intellectual property which the Avast Group is alleged to have infringed, potentially even if the Avast Group believes such claims to be without merit. However, such licensing agreements may not be available on acceptable terms, or at all. If the Avast Group cannot obtain required licenses, or if existing licenses are not renewed, litigation could result. Litigation is inherently uncertain and any adverse decision could result in a loss of proprietary rights, subject the Avast Group to significant liabilities, require the Avast Group to seek licenses from others and otherwise negatively affect the Avast Group’s business operations.
Avast operates a digital business globally, and the scale and complexity of new laws, including regarding data protection, auto-renewal billing and tax, are increasing as the digital economy becomes the backbone of global economic growth.
New laws or changes in the interpretation or application of existing laws may impose restrictions and obligations on the Avast Group that negatively impact the Avast Group’s ability to operate or compete effectively and its profitability and ability to grow. Failure to comply with regulatory requirements could result in increased litigation (including class actions), investigations, fines and censure by governmental and regulatory bodies, resulting in negative financial consequences and an impact on management time and resources.
 
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THE NORTONLIFELOCK SPECIAL MEETING
Date, Time and Place
The NortonLifeLock special meeting will be held at 9:00 a.m. (Pacific Time) on November 4, 2021, or at any adjournment or postponement thereof. The special meeting will be completely virtual and conducted via live webcast. You will be able to attend the special meeting online and submit your questions prior to or during the special meeting by visiting www.virtualshareholdermeeting.com/NLOK2021SM. You will also be able to vote your shares electronically at the special meeting. Hosting a virtual special meeting affords stockholders the same rights as an in-person meeting but enables increased stockholder attendance and participation since stockholders can participate from any location around the world. In addition, the online format will allow us to communicate more effectively with you via a pre-meeting forum that you can enter by visiting www.virtualshareholdermeeting.com/NLOK2021SM and submit questions in advance of the special meeting.
Purpose of the NortonLifeLock special meeting
The purpose of the NortonLifeLock special meeting is to consider and vote on:

The proposal to approve the issuance of New NortonLifeLock Shares to Avast shareholders in connection with the Merger (the “Share Issuance Proposal”); and

The adjournment of the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of such adjournment to approve the Share Issuance Proposal (the “Adjournment Proposal”).
NortonLifeLock will transact no other business at the NortonLifeLock special meeting. Completion of the Merger is conditioned on, among other things, approval of the Share Issuance Proposal.
Record Date
Only holders of record of issued and outstanding NortonLifeLock Shares at the close of business on October 13, 2021, the Record Date, are entitled to receive notice of, and to vote at, the NortonLifeLock special meeting or at any adjournments or postponements thereof.
Quorum and Required Votes
A quorum is necessary to hold a valid meeting. A quorum will exist at the special meeting with respect to each matter to be considered at the special meeting if the holders of a majority of the shares of NortonLifeLock common stock entitled to vote at the special meeting as of the Record Date are present virtually or by proxy.
The Share Issuance Proposal requires the affirmative vote of the holders of a majority of the aggregate NortonLifeLock Shares represented virtually or by proxy and entitled to vote on such proposal at the special meeting.
The matters to be voted on at the special meeting are described in the section entitled “NortonLifeLock Proposals” beginning on page 115.
Recommendation of the NortonLifeLock Board of Directors
Based on the reasons for the recommendations discussed below in the section entitled “Information About the Merger — Reasons for the Merger, the members of the board of directors of NortonLifeLock determined that the Merger and the other matters contemplated by the Rule 2.7 Announcement and the Co-operation Agreement are fair to and in the best interests of NortonLifeLock and its stockholders and have authorized and approved the issuance of the New NortonLifeLock Shares to Avast shareholders in connection with the Merger. The NortonLifeLock board of directors unanimously recommends that NortonLifeLock stockholders vote “FOR” the Share Issuance Proposal and “FOR” the Adjournment Proposal.
 
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Common Stock Ownership of Directors and Executive Officers (page 30)
As of September 10, 2021, the directors and executive officers of NortonLifeLock held an aggregate of approximately 3.2% of the shares of our common stock entitled to vote at the special meeting. NortonLifeLock currently expects NortonLifeLock’s directors and executive officers will vote their shares in favor of the Stock Issuance Proposal and the Adjournment Proposal, but none of NortonLifeLock’s directors or executive officers have entered into any agreement obligating them to do so.
Broker Non-Votes
If you are a “street name” holder of NortonLifeLock Shares and you provide your bank, broker, trust or other nominee with voting instructions on at least one of the proposals brought before the special meeting, then your shares will be counted in determining the presence of a quorum. The proposals for consideration at the special meeting are considered “non-routine” matters, and, therefore, no broker has discretion to vote on any of the proposals to be considered at the special meeting without voting instructions from the beneficial owner of the shares. If you are a “street name” holder of shares and you do not provide your bank, broker, trust or other nominee with voting instructions, then your shares will not be counted in determining the presence of a quorum.
Under the Nasdaq rules, brokers who hold shares in a “street name” for a beneficial owner typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from the beneficial owner on how to vote. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters that Nasdaq does not deem “routine.” None of the proposals to be voted on at the special meeting are routine under the Nasdaq rules. Consequently, your bank, broker, trust or other nominee will NOT have the power to vote your NortonLifeLock Shares at the special meeting unless you provide instructions to your bank, broker, trust or other nominee on how to vote on each NortonLifeLock proposal. You should instruct your bank, broker, trust or other nominee on how to vote your shares with respect to the NortonLifeLock proposals, using the instructions provided by your bank, broker, trust or other nominee. You may be able to vote by telephone or through the Internet if your bank, broker, trust or other nominee offers these options.
Methods of Voting
If your NortonLifeLock Shares are registered in your name with NortonLifeLock’s transfer agent, American Stock Transfer & Trust Co., you are a stockholder of record with respect to those shares and you received printed proxy materials directly from NortonLifeLock. If your shares are held in an account at a bank, broker or other nominee, you are the “beneficial owner” of such shares and the printed proxy materials were forwarded to you by that bank, broker or other nominee. In that circumstance, the bank, broker or other nominee is considered the stockholder of record for purposes of voting at the special meeting. As a beneficial owner, you have the right to instruct the bank, broker or other nominee how to vote the shares held in your account.
If you are a stockholder of record of NortonLifeLock common stock, you may vote:
Internet — You may vote by proxy via the Internet by following the instructions provided until 8:59 p.m. Pacific Time on November 3, 2021;
Telephone — You may vote by proxy by telephone by calling the toll-free telephone number located on the proxy card or available via the Internet until 8:59 p.m. Pacific Time on November 3, 2021;
Mail — You may vote by completing, signing and returning your proxy card and returning it in the prepaid return provided envelope via mail. If you vote by mail, your proxy card must be received by 8:59 p.m. Pacific Time on November 3, 2021; or
Virtually — You may vote through virtual attendance at the special meeting. To participate in and vote at the virtual special meeting, you will need the 16-digit control number included on your proxy card or on the instructions that accompanied your proxy materials.
 
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If you are a beneficial owner of NortonLifeLock Shares held through a broker or bank in street name, you may submit voting instructions to your bank, broker or other nominee:
Internet — You may vote via the Internet by following the instructions provided to you by your bank, broker or other nominee;
Telephone — You may vote by telephone by calling the toll-free telephone number located on the voting instruction form provided by your bank, broker or other nominee or available via the Internet; or
Mail — You may vote by completing, signing and returning the voting instruction form and returning it in the prepaid return provided envelope via mail; or
Virtually — You may vote virtually at the special meeting but you must first obtain a legal proxy form from the bank, broker or other nominee that holds your NortonLifeLock Shares. Please contact such broker or organization for instructions regarding obtaining a legal proxy. If you do obtain a legal proxy and plan to attend the special meeting virtually, you will need the 16-digit control number included on your proxy card or on the instructions that accompanied your proxy materials.
NortonLifeLock provides Internet proxy voting to allow you to vote your shares online. However, please be aware you must bear any costs associated with your Internet access, such as usage charges from Internet access providers or telecommunication companies.
Voting Virtually
Owners of record will need the 16-digit control number included on their proxy card or on the instructions that accompanied their proxy materials to be admitted to the special meeting. If your ownership is through a bank, broker or other nominee, then, in addition to 16-digit control number, you will also need to have proof of your share ownership to be admitted to the special meeting. A recent account statement, letter or proxy from your bank, broker or other nominee will suffice. In order to vote at the special meeting, if you are not an owner of record, you must first obtain a legal proxy form from the bank, broker or other nominee that holds your shares. Even if you plan to attend the special meeting virtually, the NortonLifeLock board of directors recommends that you vote your shares in advance as described below so that your vote will be counted if you later decide not to attend the special meeting.
Voting by Proxy
If you hold your shares directly as the holder of record, you may vote by proxy without virtually attending the special meeting. You can vote by proxy via the Internet, by telephone or by mail by following the instructions provided in the enclosed proxy card. If you are the beneficial owner of shares held through a broker or bank in street name, you should follow the instructions provided on the voting instructions form provided by your bank, broker or other nominee.
Revocability of Proxies
If you are a stockholder of record of NortonLifeLock, you may change your vote or revoke your proxy at any time before your shares are voted at the special meeting by:

voting again by proxy via the Internet or by telephone;

sending a proxy card dated later than your last vote;

notifying the NortonLifeLock Corporate Secretary in writing at the address listed in the section entitled “Where You Can Find Additional Information” beginning on page 123, stating that you are revoking your proxy; or

voting virtually at the NortonLifeLock special meeting.
If you are a beneficial owner of NortonLifeLock Shares, you must contact your bank, broker or other nominee with whom you have an account to obtain information regarding changing your voting instructions.
 
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Proxy Solicitation Costs
The enclosed proxy card is being solicited on behalf of the NortonLifeLock board of directors. In addition to solicitation by mail, NortonLifeLock’s directors, officers and employees may solicit proxies virtually, by telephone or by electronic means. These persons will not be specifically compensated for doing this.
NortonLifeLock has retained D.F. King & Co., Inc. to assist in the solicitation process. NortonLifeLock will pay D.F. King & Co., Inc. a fee of approximately $12,500 as well as reasonable and documented out-of-pocket expenses. NortonLifeLock also has agreed to indemnify D.F. King & Co., Inc. against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions).
NortonLifeLock will ask banks, brokers and other custodians, nominees and fiduciaries to forward the proxy solicitation materials to the beneficial owners of NortonLifeLock Shares held of record by such nominee holders. NortonLifeLock will reimburse these nominee holders for their customary clerical and mailing expenses incurred in forwarding the proxy solicitation materials to the beneficial owners.
No Appraisal or Dissenters’ Rights
Under Delaware law, because the merger consideration is in the form of NortonLifeLock common stock, no appraisal or dissenters’ rights are available to the holders of NortonLifeLock common stock or Avast common stock in connection with the Merger.
Results of the Special Meeting
Within four business days following the special meeting, NortonLifeLock intends to file the final voting results with the SEC on a Current Report on Form 8-K. If the final voting results have not been certified within that four business day period, NortonLifeLock will report the preliminary voting results on a Current Report on Form 8-K at that time and will file an amendment to the Current Report on Form 8-K to report the final voting results within four business days of the date that the final results are certified.
Contact Information for Questions About Voting
If you have any questions about how to vote or direct a vote in respect of your NortonLifeLock Shares, you may contact D.F. King & Co., Inc., NortonLifeLock’s proxy solicitor, at:
Stockholders may call toll-free at (800) 591-8263.
Banks and brokers may call collect at (212) 269-5550.
NORTONLIFELOCK STOCKHOLDERS SHOULD CAREFULLY READ THIS PROXY STATEMENT IN ITS ENTIRETY FOR MORE DETAILED INFORMATION CONCERNING THE SHARE ISSUANCE PROPOSAL.
Absence of Voting Instructions on Proxy; Adjournment and Postponement
Although it is not currently expected, the special meeting may be adjourned or postponed for the purpose of soliciting additional proxies. Any signed proxies received by NortonLifeLock in which no voting instructions are provided on such matter will be voted “FOR” the Share Issuance Proposal and “FOR” the Adjournment Proposal. Any adjournment or postponement of the special meeting for the purpose of soliciting additional proxies will allow stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned or postponed.
 
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INFORMATION ABOUT THE MERGER
The following summary describes certain material terms of, and documents and agreements related to, the Merger, the Rule 2.7 Announcement, the Scheme Document, the Co-operation Agreement and the Irrevocable Undertakings. This summary is not complete and it is qualified in its entirety by reference to the annexes to this proxy statement and the other documents and agreements that are incorporated herein by reference. We urge you to read this entire proxy statement and the annexes to this proxy statement carefully and in their entirety, as this summary may not contain all of the information that is important to you regarding the Merger and related matters.
Overview of the Merger
Under the terms of the Merger, Avast shareholders will be entitled to receive for each Avast Share held, in respect of their entire holding of Avast Shares, either: (i) the Majority Cash Option; or (ii) the Majority Stock Option. Avast shareholders who do not positively elect to receive the Majority Stock Option will receive the Majority Cash Option.
It is intended that the Merger will be implemented by means of a Scheme under Part 26 of the UK Companies Act. In connection with the Merger, NortonLifeLock, Bidco and Avast entered into the Co-operation Agreement, which governs certain obligations of the parties with respect to the Merger. The Merger will be subject to the applicable requirements of the UK Takeover Code, the Panel, the London Stock Exchange and the UK Financial Conduct Authority (the “FCA”).
Based on NortonLifeLock’s closing share price of $27.20 on July 13, 2021 (being the last business day on which NortonLifeLock Shares traded on Nasdaq before the commencement of the period commencing at 10:23 p.m. UK time on July 14, 2021 and ending on (i) the earlier of the date on which the Scheme becomes effective, lapses or is withdrawn (or such other date as the Panel may decide) or (ii) the earlier of the date on which the Takeover Offer becomes unconditional, lapses or is withdrawn (or such other date as the Panel may decide) (other than, in the case of (i), where such lapse or withdrawal is as a result of Bidco exercising its right to implement the Merger by way of a Takeover Offer) (the “Offer Period”)), and the exchange rate of $1.38595: £1 derived from Bloomberg FX Fixings Spot Exchange Rate as at 4:30 p.m. UK time on August 9, 2021, (i) the Majority Cash Option values each Avast Share at 608.4 pence per share ($8.43 per share) and (ii) the Majority Stock Option values each Avast Share at 551.1 pence per share ($7.64 per share).
The Majority Cash Option represented a premium of approximately:

20.7% to the closing price of 504.2 pence per Avast Share on July 14, 2021 (being the last business day on which Avast Shares traded on the London Stock Exchange prior to the commencement of the Offer Period); and

28.0% to the volume weighted average price of 475.1 pence per Avast Share for the three-month period ended July 14, 2021.
The Majority Stock Option represented a premium of approximately:

9.3% to the closing price of 504.2 pence per Avast Share on July 14, 2021 (being the last business day on which Avast Shares traded on the London Stock Exchange prior to the commencement of the Offer Period); and

16.0% to the volume weighted average price of 475.1 pence per Avast Share for the three-month period ended July 14, 2021.
NortonLifeLock and Bidco have received irrevocable commitments from the Supporting Shareholders to support the Merger. Pursuant to such undertakings, the Supporting Shareholders have (subject to certain exceptions) agreed to vote, or procure the vote of, their entire beneficial holdings of Avast Shares in favor of the Scheme at the Court Meeting and the General Meeting or, if the Merger is implemented by way of a Takeover Offer, the Supporting Shareholders have agreed that they will accept such Takeover Offer. As of the close of business on August 9, 2021, the Supporting Shareholders beneficially owned approximately 36.93% of the existing issued ordinary share capital of Avast. In
 
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addition, pursuant to the undertakings and subject to certain exceptions therein, each of the Avast directors who holds Avast shares, representing in aggregate approximately 35.96% of the existing issued ordinary share capital of Avast as of the close of business on August 9, 2021, has undertaken to elect the Majority Stock Option in respect of their entire beneficial holdings of Avast Shares.
Depending on the elections of Avast shareholders, and on the same basis as set out above, the Merger values the entire issued and to be issued ordinary share capital of Avast between approximately £6.2 billion ($8.6 billion) (if all Avast shareholders, other than the Avast directors who hold Avast shares, receive the Majority Cash Option) and £5.8 billion ($8.1 billion) (if all Avast shareholders elect for the Majority Stock Option). The enterprise value attributed to Avast is between approximately £6.6 billion ($9.2 billion) (if all Avast shareholders, other than the Avast directors who hold Avast shares, receive the Majority Cash Option) and £6.2 billion ($8.6 billion) (if all Avast shareholders elect for the Majority Stock Option).
Upon completion of the Merger, and subject to the elections made by Avast Shareholders, Avast Shareholders will own between approximately 14% (if all Avast Shareholders, other than the Avast directors who hold Avast shares, receive the Majority Cash Option) and approximately 26% (if all Avast Shareholders elect for the Majority Stock Option) of the Combined Company.
In addition to the consideration payable in connection with the Merger, the Avast board of directors will be entitled to declare and pay an interim dividend in respect of the six-month period ended June 30, 2021 of 4.8 cents per Avast Share (the “Interim Avast Dividend”). In addition to the consideration payable in connection with the Merger and the Interim Avast Dividend, if the Merger has not become effective before March 1, 2022, the Avast board of directors reserves the right to declare and pay either a further interim dividend or recommend and pay a final dividend in respect of the year ending December 31, 2021 of 11.2 cents per Avast Share (the “Second Avast Dividend”). In addition to the consideration payable in connection with the Merger, the Interim Avast Dividend and the Second Avast Dividend, if the Merger has not become effective before August 11, 2022, the Avast board of directors reserves the right to declare and pay an interim dividend in respect of the six-month period ended June 30, 2022 of 4.8 cents per Avast Share (the “Third Avast Dividend”). Avast shareholders will be entitled to receive the Interim Avast Dividend, the Second Avast Dividend and the Third Avast Dividend (together, the “Agreed Avast Dividends”), if and to the extent declared and paid in accordance with the terms set out in the Rule 2.7 Announcement, in each case without any reduction to the consideration payable by Bidco under the terms of the Merger. If any dividend and/or other distribution and/or other return of capital or value (a “Return of Value”) is announced, declared, made, payable or paid in respect of the Avast Shares on or after the date of the Rule 2.7 Announcement and prior to the date on which (a) the Scheme becomes effective in accordance with its terms; or (b) if NortonLifeLock elects to implement the Merger by way of a Takeover Offer, the date the Takeover Offer becomes or is declared unconditional in all respects (the “Effective Date”), other than, or in excess of, the Agreed Avast Dividends, Bidco reserves the right to reduce the aggregate consideration payable in respect of the Avast Shares by the aggregate amount of such Return of Value.
NortonLifeLock intends to continue to declare and pay quarterly dividends of 12.5 cents per NortonLifeLock Share to its stockholders in the period up to the Effective Date (the “Agreed NortonLifeLock Dividends”). If any Return of Value is announced, declared, made, payable or paid in respect of the NortonLifeLock Shares on or after the date of the Rule 2.7 Announcement and prior to the Effective Date and which has a Record Date prior to the Effective Date, other than, or in excess of, the Agreed NortonLifeLock Dividends (an “Excess NortonLifeLock Dividend”), Bidco will be required to revise the terms of the consideration payable under the terms of the Merger to put Avast shareholders in the same economic position as they would have been if any such Excess NortonLifeLock Dividend had not been paid, by increasing the cash consideration per Avast Share payable under each of the Majority Cash Option and the Majority Stock Option by an amount equal to (i) the amount of the relevant Excess NortonLifeLock Dividend (expressed on a per NortonLifeLock Share basis) multiplied by (ii) in the case of the Majority Cash Option, 0.0302, and, in the case of the Majority Stock Option, 0.1937.
Prior to completion of the Merger, Bidco will procure a facility that will be made available to Avast shareholders under which Avast shareholders will be able to elect (subject to the terms and conditions of the facility) to receive cash consideration in GBP rather than USD (after deduction of any transaction
 
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or dealing costs associated with the conversion) under the Majority Cash Option or the Majority Stock Option (as applicable) at the prevailing market exchange rate (which may be determined over a period of more than one day) on the latest practicable date for fixing such rate prior to the relevant payment date. Further details of this facility will be set out in the Scheme Document.
On completion of the Merger, the Combined Company will be dual headquartered in Tempe, Arizona, USA, and Prague, Czech Republic, and will have a significant presence in the Czech Republic. The Combined Company will be listed on Nasdaq. NortonLifeLock intends to undertake a review process, in collaboration with Avast’s CEO, to determine the post-Merger name of the Combined Company to ensure that it best reflects its strategic vision of expanding its cyber safety platform with trust-based solutions and its broad global prospects.
To the extent that Avast shareholders elect for the Majority Stock Option, NortonLifeLock intends, subject to market conditions and other capital requirements, to implement the Post-Merger Buyback program with a view to establishing a net leverage ratio for the Combined Company in the region of approximately 3.5x net debt to pro forma EBITDA. If all Avast shareholders elect for the Majority Stock Option, NortonLifeLock expects that the amount of the Post-Merger Buyback program, if implemented, would be up to approximately $3 billion. However, this amount would be reduced by the amount of any incremental cash consideration payable to Avast shareholders who receive the Majority Cash Option. The Post-Merger Buyback is incremental to Nortonlifelock’s current share buyback program of approximately $1.8 billion, enabling a total potential buyback program of up to approximately $4.8 billion.
The Merger is conditioned upon, among other things: (1) approval by the requisite majority or majorities of Avast shareholders at the Court Meeting and the General Meeting; (2) the Scheme becoming effective no later than the Long Stop Date; (3) approval of the Share Issuance Proposal by the requisite vote of NortonLifeLock’s shareholders at the special meeting; (4) the receipt of applicable antitrust and regulatory approvals; and (5) the sanction of the Scheme by the Court. Additional conditions to the completion of the Merger are discussed further below in the section entitled “Information About the Merger — The Rule 2.7 Announcement and the Scheme of Arrangement — Conditions to the Merger.
United States Antitrust
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”), the Merger cannot be consummated until, among other things, notifications have been submitted to the U.S. Federal Trade Commission (the “FTC”) and the Antitrust Division of the U.S. Department of Justice (the “Antitrust Division”), and specified waiting period requirements have been observed. Each of NortonLifeLock and Avast have filed a Notification and Report Form pursuant to the HSR Act with the FTC and the Antitrust Division, which initiated a 30-day waiting period that began on September 8, 2021. The 30-day waiting period under the HSR Act is scheduled to expire at 11:59 p.m. Eastern Time on October 8, 2021. During the 30-day waiting period, the FTC or the Antitrust Division can choose to shorten the waiting period by granting early termination or may extend the waiting period by issuing a Request for Additional Information and Documentary Materials (a “Second Request”) to each party. If Second Requests are issued, the waiting period would be extended until 8:59 p.m. (Pacific Time in the U.S.) on the 30th day after certification of substantial compliance with such Second Request by both parties (however, the parties could agree with the FTC or DOJ not to consummate the Merger for some period of time after the waiting period expires). As a practical matter, if such Second Requests were issued, it could take a significant period of time to achieve substantial compliance with such Second Requests.
Other Antitrust Clearances
NortonLifeLock and Avast derive revenues in other jurisdictions where merger control filings or clearances are required or prudent, including the United Kingdom, Germany and Spain (and/or, upon referral, approval from the European Commission), Australia and New Zealand. The Merger cannot be consummated until after the applicable waiting periods have expired or the relevant approvals have been obtained under the antitrust and competition laws of these jurisdictions.
 
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Other Regulatory Clearances
The Merger is conditional upon the receipt of the following foreign investment approvals (to the extent required) or the expiration of any applicable waiting periods under the foreign investment laws of such jurisdictions:

a written notification from CFIUS that it has completed action under Section 721 of the DPA or, if CFIUS has sent a report to the President of the United States, that the President has announced a decision not to take action or has not taken action after fifteen days from the end of the investigation period; and

the receipt or waiver of applicable foreign investment approvals in Germany, the Czech Republic, Romania and, if in force and applicable, any such approvals required in the United Kingdom and the Netherlands.
Information about NortonLifeLock
NortonLifeLock, a Delaware corporation, is a leading provider of consumer cyber safety solutions built around protecting and empowering people to live their digital lives safely. Founded in 1982 and headquartered in Tempe, Arizona, NortonLifeLock serves over 80 million users in more than 150 countries, including 23 million direct customers.
NortonLifeLock’s service offering is positioned across three key cyber safety pillars: Security, providing protection for PCs, Macs and mobile devices against malware, viruses, adware, ransomware and other online threats; Identity Protection, which includes monitoring, alerts and restoration services to protect the safety of customers; and Online Privacy, which provides enhanced security and online privacy through an encrypted data tunnel and other privacy monitoring services.
NortonLifeLock’s subscription-based cyber safety solutions are primarily sold direct-to-consumer through its NortonLifeLock and Avira websites, and indirectly through partner relationships with retailers, telecom service providers, hardware original equipment manufacturers (OEMs), and employee benefit providers. The acquisition of Avira in 2020 expanded NortonLifeLock’s go-to-market into the freemium channel.
The address of NortonLifeLock’s principal executive office is 60 E. Rio Salado Parkway, Suite 1000, Tempe, Arizona 85281 and its phone number is (650) 527-8000. NortonLifeLock’s stock is listed on Nasdaq under the symbol “NLOK.”
Information about Bidco
Nitro Bidco Limited (“Bidco”) is a newly incorporated private limited company and a wholly-owned subsidiary of NortonLifeLock. Bidco has been formed at the direction of NortonLifeLock for the purposes of implementing the Merger. Bidco has not traded since its date of incorporation, nor has it entered into any obligations other than in connection with the Merger.
The address of Bidco’s principal executive office is c/o NortonLifeLock Inc., 60 E. Rio Salado Parkway, Suite 1000, Tempe, Arizona 85281 and its phone number is (650) 527-8000.
Information about Avast
Avast is a leading global cybersecurity provider that is dedicated to keeping people safe and private online. Avast safeguards more than 435 million users worldwide, protecting their digital data, identity and privacy, with 1.5 billion attacks and over 200 million new files blocked each month on average in 2020. Avast offers security software under the Avast and AVG brands, in the form of both free and paid-for products. Avast has customers in the vast majority of countries in the world.
The majority of Avast’s revenues are derived from its consumer direct operations, which primarily involves up-selling paid antivirus software with advanced features to users of its free antivirus software, and cross-selling adjacent, non-antivirus paid products such as privacy enhancement and PC optimization tools.
 
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The common shares of Avast are admitted to the premium listing segment of the Official List and to trading on the Main Market for listed securities of the London Stock Exchange. Avast is also a member of the FTSE 100 index. As of September 15, 2021, Avast had a market capitalization of approximately £6.0 billion.
As a leading global cybersecurity provider, Avast stands for a safe, open, and fair digital world for everyone, with a commitment to lead from the front to build a more diverse and inclusive technology sector. Through a number of initiatives and projects, Avast commits to being: (i) socially responsible, by aiming to maintain its annual commitment to social impact initiatives based on the 1% of profit model and by extraordinary donations such as a $25 million donation for COVID relief, and by continuously encouraging employee volunteering in local communities; (ii) environmentally responsible, by disclosing Scope 1 and 2 Emissions, and by committing to a small environmental footprint and to being carbon neutral and Gold Standard (carbon offset); and (iii) responsible from a governance perspective, with a structured ESG reporting system and a focus on increased female representation on its board of directors.
Background of the Merger
NortonLifeLock’s board of directors and management periodically review and consider NortonLifeLock’s results of operations, future growth prospects and competitive positions in the industries in which it operates. This review has included the exploration and evaluation of potential acquisitions and business combination transactions aimed at, among other things, expanding NortonLifeLock’s product and service offerings, diversifying its businesses and increasing its scale in light of a highly competitive marketplace for NortonLifeLock’s products.
Commencing shortly after Vincent Pilette, CEO of NortonLifeLock, was appointed to the CEO role on November 8, 2019, Mr. Pilette and Ondrej Vlcek, CEO of Avast, held intermittent conversations on the evolution of the industries in which NortonLifeLock and Avast operate and the common values and complementary strengths of the two companies. Discussions did not progress beyond very preliminary stages (and no formal proposals were made) and, due to broader market and industry conditions at such time, these discussions ended in October 2020.
On May 19, 2021, Mr. Pilette and Mr. Vlcek, held a telephonic discussion during which Mr. Pilette expressed his views on the industries in which Avast and NortonLifeLock operate, the complementary nature of Avast and NortonLifeLock and the potential opportunity to bring the two companies together. Mr. Pilette and Mr. Vlcek held follow on discussions on the same topics on May 24, 2021 and May 26, 2021 but no formal proposal was made.
On May 25, 2021, NortonLifeLock contacted Evercore Group L.L.C. (“Evercore”), to discuss Evercore’s ability to act as NortonLifeLock’s financial advisor in connection with a potential transaction with Avast. Representatives of NortonLifeLock’s management considered retaining Evercore as NortonLifeLock’s financial advisor because of Evercore’s qualifications and experience in providing strategic and financial advisory services in comparable transactions and Evercore’s reputation.
On May 28, 2021, Frank Dangeard, the Chairman of NortonLifeLock, John Schwarz, the Chairman of Avast, Mr. Pilette and Mr. Vlcek convened for a telephonic discussion where Mr. Dangeard and Mr. Pilette further expressed NortonLifeLock’s interest in engaging in a transaction with Avast and the benefits of such a transaction. No formal proposal was made during this discussion.
On May 31, 2021, the NortonLifeLock board of directors held a meeting by videoconference at which NortonLifeLock management and representatives of Evercore and Kirkland & Ellis LLP (“K&E”), NortonLifeLock’s legal advisor, were present. Following presentations (i) from NortonLifeLock management on the strategic rationale of a proposed transaction with Avast, potential synergies and key considerations (including on social and governance matters), (ii) from Evercore on financial considerations with respect to a proposed transaction at various price points and the key features of deals for UK listed companies (including UK Takeover Code considerations) and (iii) from K&E on the board’s fiduciary duties, the NortonLifeLock board of directors approved the submission by NortonLifeLock of an initial non-binding all-stock offer to acquire Avast based on an exchange ratio of 0.2622 NortonLifeLock Shares for each Avast Share representing a premium of approximately 10% to
 
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the May 26, 2021 closing price of Avast Shares (based on the price of the NortonLifeLock Shares on the same day) (the “May 31 Proposal”) and which would result in Avast shareholders owning approximately 32% of the Combined Company. The NortonLifeLock board of directors also approved: (i) the other key terms in the May 31 Offer Letter, as further described below; (ii) the formation of an ad hoc advisory group of members of the NortonLifeLock board of directors, consisting of Eric Brandt, Frank Dangeard, Peter Feld and Ken Hao (the “Advisory Group”) to assist and advise Mr. Pilette with respect to ongoing negotiations with Avast; and (iii) following discussion of Evercore’s draft relationship disclosure letter, the engagement of Evercore as financial advisor.
The May 31 Proposal was delivered to Mr. Schwarz and Mr. Vlcek by means of a non-binding offer letter on May 31, 2021 (the “May 31 Offer Letter”). In addition to the all-stock transaction at the stated exchange ratio, the May 31 Offer Letter included statements with respect to NortonLifeLock’s (i) intention to execute a significant share-buyback over time post-closing (subject to market conditions), (ii) proposal that the transaction be effected through a UK court-sanctioned scheme of arrangement, (iii) proposal that the combined company be dual-headquartered in Tempe, Arizona and Prague, with a NASDAQ listing and a commitment to run a process for a new name for the combined company, (iv) proposal that the governance of the combined business would reflect an appropriate balance as between the parties based on the transaction structure and (v) requirement that the Avast board members, including Pavel Baudiš and Eduard Kučera, who (together with their connected persons) held approximately 37% of the Avast Shares, deliver customary “hard” irrevocable undertakings in support of the transaction.
On June 1, 2021, Mr. Schwarz delivered a letter to Mr. Dangeard and Mr. Pilette rejecting NortonLifeLock’s May 31 Proposal. On June 2, 2021, Avast’s financial advisors, UBS AG London Branch (“UBS”) and J.P. Morgan Cazenove (“JPM”), in a telephonic conversation with Evercore, indicated that, although the combination made sense strategically, the May 31 Proposal had been rejected by the Avast board of directors on the basis that the proposed premium was not sufficient and that a portion of Avast shareholders may be unable to hold NortonLifeLock Shares received as consideration in a merger because NortonLifeLock was incorporated and listed in the United States. Following that conversation, a representative of Evercore communicated this information to NortonLifeLock’s senior management.
On June 9, 2021, following a videoconference meeting with the Advisory Group on June 8, 2021 and subsequent to further discussions with Evercore, K&E and Macfarlanes, LLP (“Macfarlanes”), NortonLifeLock’s UK legal advisor, Mr. Pilette, on behalf of NortonLifeLock, submitted a revised non-binding offer letter to Avast (the “June 9 Proposal”). The June 9 Proposal addressed the feedback from Avast and its advisors on the May 31 Proposal and provided that Avast shareholders would be entitled to elect between two options: (i) a majority cash option (approximately 70% cash and 30% stock), consisting of $5.69 in cash and 0.0863 of a NortonLifeLock Share per Avast Share, providing substantial liquidity at a premium of approximately 21% to the June 8, 2021 closing price of Avast Shares (based on the price of the NortonLifeLock Shares on the same day) while preserving an opportunity to meaningfully participate in the future upside of the combination, and (ii) a majority stock option (approximately 20% cash and 80% stock), consisting of 0.2185 of a NortonLifeLock Share and $1.54 in cash per Avast Share, representing a smaller initial premium of approximately 15% to the June 8, 2021 closing price of Avast Shares (based on the price of the NortonLifeLock Shares on the same day) but enabling Avast shareholders to benefit from more fully participating in the potential strategic benefits anticipated to arise from the combination, the financial upside from the significant synergies, and the re-rating of the combined company driven by enhanced scale and growth acceleration and the valuation support from the share buyback. Avast shareholders would be free to elect to receive either the majority cash option or the majority stock option, but the letter included an express requirement that the Avast directors, including the Avast founders, would irrevocably commit to elect for the majority stock option. As a result, depending on the elections made by other Avast shareholders, Avast shareholders would hold between approximately 20% and approximately 28% of the combined company upon closing. The June 9 Proposal included NortonLifeLock’s (i) continued commitment to a governance and operational structure, including dual headquarters, that reflected the deal structure and the contributions of both companies and (ii) proposal for a significant share-buyback over time post-closing (subject to Avast shareholder elections and market conditions). Prior to delivery of the June 9 Proposal, on June 8, 2021 Mr. Pilette held a telephonic conversation with Mr. Vlcek to preview the June 9 Proposal, in particular the rationale for the election mechanism for the two options.
 
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On June 11, 2021, Avast delivered a letter to NortonLifeLock rejecting the June 9 Proposal and indicating that further feedback would be delivered by Avast’s advisors.
On June 11, 2021, JPM and UBS, on behalf of Avast, expressed to Evercore that the dual-option offer structure in the June 9 Proposal was acceptable, and that the respective mix of cash and stock was directionally accurate, but that the price continued to undervalue the business and Avast was not therefore willing to transact on the basis of the June 9 Proposal. Following this conversation, Evercore updated NortonLifeLock senior management.
On June 14, 2021, following a discussion with members of the Advisory Group on the same day, Mr. Pilette, on behalf of NortonLifeLock, submitted a revised non-binding offer to Avast (the “June 14 Proposal”). The June 14 Proposal increased the majority cash option to $6.67 in cash and 0.0583 of a NortonLifeLock Share per Avast share (approximately 80% cash and 20% stock), representing a premium of approximately 21% to the June 10, 2021 closing price of Avast Shares (based on the price of the NortonLifeLock Shares on the same day), and the majority stock option to 0.1937 of a NortonLifeLock share and $2.37 in cash (approximately 70% stock and 30% cash), representing a premium of approximately 15% to the June 10, 2021 closing price of Avast Shares (based on the price of the NortonLifeLock Shares on the same day). The June 14 Proposal expressed that the other terms of the proposal (including the buyback and the obligation of Avast directors to elect for the majority stock option) remained unchanged from the June 9 Proposal.
On June 15, 2021, Mr. Vlcek, at the direction of the Avast board, communicated to Mr. Pilette by telephone that the June 14 Proposal was closer to Avast’s expectations and that, more specifically: (i) the majority stock option terms in the June 14 Proposal were acceptable; and (ii) the mix of cash and stock for the majority cash option in the June 14 Proposal was acceptable but the overall value of this option needed to increase. Mr. Vlcek further indicated that the Avast directors would agree to an irrevocable undertaking to elect for the majority stock option under the terms of such option.
On June 16, 2021, following discussions with members of the Advisory Group, Mr. Pilette submitted a further revised non-binding offer to Mr. Schwarz and Mr. Vlcek whereby Avast shareholders would have the ability to elect between: (i) a majority cash option, consisting of $7.61 in cash and 0.0302 of a NortonLifeLock Share per Avast Share, representing a premium of approximately 24% to the June 15, 2021 closing price of Avast Shares (based on the price of the NortonLifeLock Shares on the same day), or (ii) a majority stock option, consisting (in line with the June 14 Proposal) of 0.1937 of a NortonLifeLock share and $2.37 in cash per Avast share, representing a premium of approximately 14% to the June 15, 2021 closing price of Avast Shares (based on the price of the NortonLifeLock Shares on the same day) (the “June 16 Proposal”). Consistent with prior proposals, Mr. Pilette indicated that the Avast directors, including the Avast founders, would be required to irrevocably commit to elect for the majority stock option. Depending on the elections made by Avast shareholders, Avast shareholders would hold between approximately 14% and approximately 26% of the Combined Company. The June 16 Proposal expressed that the other terms of the proposal (including the buyback and the obligation of the Avast directors to elect for the majority stock option) remained unchanged from the June 9 and June 14 proposals.
On June 16, 2021, Mr. Vlcek informed Mr. Pilette that the Avast board of directors was willing to commence due diligence and negotiation of transaction documents based upon the financial terms of the June 16 Proposal, subject to agreement on certain key non-financial transaction terms set out below.
On June 19, 2021, JPM and UBS, at the instruction of Avast, delivered by email to Evercore a set of proposals with respect to key non-financial transaction terms, including: (i) a break fee equal to 5% of the transaction value payable by NortonLifeLock in the event of any of failure to obtain required regulatory approvals, a change of recommendation by NortonLifeLock’s board of directors or a failure to obtain NortonLifeLock shareholder approval; (ii) a “hell or high water” commitment from NortonLifeLock to obtain the required regulatory approvals and authorizations; (iii) three seats on the board of directors of the combined company for Avast directors; (iv) the continued payment of ordinary course dividends by Avast and NortonLifeLock until the consummation of the transaction (with the Avast permitted dividends not reducing the merger consideration and with the NortonLifeLock permitted dividends not resulting in a requirement to increase the merger consideration); (v) dual headquarters in Tempe, Arizona
 
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and Prague; and (vi) a multi-brand strategy post-closing with a mutually agreed new name for the combined company. The communication also confirmed that Avast directors would enter into “hard” irrevocable undertakings, including that the Avast directors would accept the majority stock option. Following this communication, a representative of Evercore communicated this set of proposals to NortonLifeLock’s senior management. NortonLifeLock’s initial response, which was delivered through a combination of an email from Mr. Pilette to Mr. Vlcek on June 25 and discussions between advisors to the parties, and delivered in writing by Kirkland to White & Case LLP (“W&C”), Avast’s legal advisor, on July 2, 2021 included (i) a rejection of all break fees; (ii) sharing of the risk of obtaining regulatory approvals and authorizations and an express rejection of a “hell or high water” commitment; (iii) two seats on the board of directors of the combined company for Avast directors, with Mr. Vlcek and Mr. Baudiš being mentioned as acceptable nominees; (iv) acceptance of the continued payment of ordinary course dividends by Avast and NortonLifeLock (without adjustment to the merger consideration); (v) acceptance of the dual-headquarters in Tempe, Arizona and Prague; and (vi) acceptance of a multi-brand strategy where appropriate and a commitment to run a process prior to closing which would result in a list of new names to be proposed to the combined company’s board for approval. NortonLifeLock’s response also included a requirement that all of Avast’s existing unvested employee equity awards were to be rolled over equivalent awards at NortonLifeLock.
On June 20, 2021, W&C, Avast’s legal advisor, delivered a draft mutual nondisclosure agreement to Macfarlanes. In the days following this delivery, representatives of each company, as well as Macfarlanes, K&E and W&C, negotiated the terms of this agreement together with the terms of a clean team and joint defence agreement (the initial draft of which was provided by K&E). The mutual non-disclosure agreement was executed on June 23, 2021 and the clean team and joint defence agreement was executed on Jun 24, 2021. Following execution of these agreements, NortonLifeLock and Avast commenced sharing certain due diligence information. On June 30, 2021, NortonLifeLock and its advisors were granted access to an online datasite established by Avast. NortonLifeLock and its advisors conducted a customary due diligence review of Avast which included, among other items, commercial, financial, accounting (including a review of Avast’s second quarter results), legal and tax diligence. This due diligence review continued until, and completion of this review was a partial driver of the timing of, the announcement of the transaction on August 10, 2021. Avast conducted reciprocal due diligence on NortonLifeLock during this period.
On July 2, 2021, W&C delivered a draft of the Co-operation Agreement to Macfarlanes and K&E, and on July 10, 2021, Macfarlanes and K&E delivered a draft Rule 2.7 Announcement and the form of Irrevocable Undertaking to be executed by the Avast directors who hold shares in Avast to W&C. The initial draft of the Co-operation Agreement reflected (where such points were included in the Co-operation Agreement) the proposals made by JPM and UBS to Evercore on June 19, 2021 and also included the flexibility for the remuneration committee of Avast to exercise discretion as to the treatment of Avast’s existing employee equity awards (including to accelerate the vesting of any of these awards at closing of the merger).
From June 19, 2021 until the execution of the Co-operation Agreement and publication of the Rule 2.7 Announcement on August 10, 2021, NortonLifeLock, Avast, K&E, W&C, Macfarlanes, Evercore, UBS and JPM exchanged drafts of the Co-operation Agreement and the Rule 2.7 Announcement and engaged in negotiations and discussions regarding the terms and conditions of the Co-operation Agreement and the statements in the Rule 2.7 Announcement, including: with respect to the terms upon which NortonLifeLock could consider alternative transaction proposals; the scope of NortonLifeLock’s obligations in connection with obtaining regulatory approvals; the interim operating covenants applicable to NortonLifeLock; the treatment of Avast equity awards; the size, triggers and exceptions for payment by NortonLifeLock of break fees; board leadership; and the number of Avast directors to be nominated to the board of the Combined Company. For further discussion of the terms of the transaction documents and the resolution of the above issues, see the section entitled “Information About the Merger” beginning on page 123. In addition, following preliminary discussions on the Irrevocable Undertakings with W&C on July 10, 2021, from July 22, 2021 to August 10, 2021 NortonLifeLock and its advisors also negotiated the terms of the Irrevocable Undertakings to be entered into by Mr. Kučera and Mr. Baudiš with the financial and legal advisors to Mr. Kučera and Mr. Baudiš, with the focus of these negotiations including (among other matters) the circumstances under which the irrevocable commitments cease
 
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to be binding or are terminable, and the circumstances under which Mr. Kučera and Mr. Baudiš would be able to revoke their election for the majority stock option. The terms of the Irrevocable Undertakings of the other directors and of the Vlcek Family Foundation were negotiated in a similar timeframe (and on similar but not identical terms, including that the Vlcek Family Foundation is not required to elect the majority stock option). For further discussion of the terms of the Irrevocable Undertakings, see the section entitled “Information About the Merger — Irrevocable Undertakings” beginning on page 68.
On June 25, 2021, June 28, 2021, July 7, 2021, July 13, 2021, July 15, 2021, July 16, 2021 July 21, 2021, July 22, 2021, July 23, 2021 and August 7, 2021 Mr. Pilette and Mr. Vlcek (joined by other member of NortonLifeLock and Avast management on July 15, July 16 and August 7) held telephonic or videoconference conversations to discuss certain of the key open items, including the board composition and leadership of the combined company, break fee sizes (and triggers) and treatment of Avast equity awards.
In parallel with the negotiation of the other transaction documentation and in order to (i) refinance the existing debt of NortonLifeLock and Avast and (ii) to finance a portion of the cash consideration of the Merger, NortonLifeLock and K&E negotiated the terms of the interim facilities agreement and the commitment letter with the lending banks and their advisors. For further discussion of the terms of the financing, see the section entitled “Information About the Merger — Financing” beginning on page 68.
On June 29, 2021, the NortonLifeLock board of directors held a meeting by videoconference, at which NortonLifeLock’s management and representatives of Evercore, K&E and Macfarlanes were present. At the meeting, NortonLifeLock management and representatives of Evercore presented to the NortonLifeLock board of directors (i) the status of negotiations with Avast, including the terms of the June 16 Proposal, (ii) certain financial considerations with respect to the June 16 Proposal and the proposed consideration elections for Avast’s shareholders, (iii) various financing structures available to NortonLifeLock in connection with the transaction (and the advantages and risks associated with each) and (iv) the contents and terms of a Rule 2.7 announcement and other documentation that would need to be prepared in connection with the transaction. Mr. Pilette and representatives of K&E then provided an overview to the NortonLifeLock board of directors of the key open items. K&E and Macfarlanes then presented on items including a preliminary discussion of regulatory matters (including the expected antitrust and foreign investment filings and their respective timings), fiduciary duties and certain matters of English law relating to the transaction, including certain obligations under and requirements of the UK Takeover Code. The NortonLifeLock board of directors, following discussion and questions to the advisors and NortonLifeLock management (including extended discussion on the regulatory risks and mitigants and the commitments NortonLifeLock would be willing to agree to in relation to obtaining regulatory approvals), expressed its support for continuing to negotiate a transaction with Avast on the basis of the terms proposed and offered guidance to NortonLifeLock’s management on potential resolutions to the open items. The NortonLifeLock board of directors also received, and reviewed, Evercore’s final relationship disclosure letter.
On July 14, 2021, in response to press speculation of a possible merger of Avast with NortonLifeLock (the “July 14 Leak”), NortonLifeLock and Avast separately issued announcements pursuant to Rule 2.4 of the UK Takeover Code confirming they were in advanced discussions regarding a possible merger. In these announcements, NortonLifeLock and Avast each confirmed that, pursuant to the UK Takeover Code, NortonLifeLock would be required either to announce a firm intention to make an offer for Avast or to announce an intent not to make an offer by 5:00 p.m. London time on August 11, 2021, unless the parties received prior consent from the Panel on Takeovers and Mergers to extend the deadline.
On July 16, 2021 and July 23, 2021, the NortonLifeLock board of directors held meetings by videoconference, at which NortonLifeLock’s management and representatives of Evercore, K&E and Macfarlanes were present. At these meetings, among other items discussed, (i) Evercore updated the board on the status of the transaction and the related financing workstream and provided preliminary valuation analyses, (ii) K&E and Macfarlanes updated the board as to the key open issues between the parties, including potential compromises, (iii) K&E provided the board with a detailed overview of the regulatory considerations and analysis relating to the proposed transaction, (iv) the board was provided with a summary of the due diligence carried out by NortonLifeLock’s management and its advisors and (v) NortonLifeLock management provided updates and views regarding the key open issues. The
 
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NortonLifeLock board of directors asked extensive questions of NortonLifeLock’s management, Evercore, K&E and Macfarlanes, in particular on the detailed regulatory overview to further understand the regulatory risks and expected timing, and offered its views on potential resolution of the open issues.
On August 9, 2021, the NortonLifeLock board of directors held a meeting by videoconference, at which NortonLifeLock’s management and representatives of Evercore, K&E and Macfarlanes were present. At the meeting, representatives of Evercore and K&E provided the NortonLifeLock board of directors with an update on key terms of the transaction and the transaction documentation, including with respect to the points still under negotiation with Avast and its advisors and options for resolution of those items. Representatives of Evercore then provided an overview of its financial analysis of the transaction and responded to questions from the NortonLifeLock board of directors.
On August 10, 2021, the NortonLifeLock board of directors held a meeting by videoconference, at which NortonLifeLock’s management and representatives of Evercore, K&E and Macfarlanes were present. Following a presentation by K&E on the final transaction documents (including the Rule 2.7 Announcement), Evercore reviewed and discussed its financial analyses with respect to the proposed transaction. At the request of the NortonLifeLock board of directors, Evercore rendered its oral opinion (which was subsequently confirmed in writing by the delivery of Evercore’s written opinion dated the same date) that, as of such date and based upon and subject to the various assumptions made, procedures followed, factors considered, and qualifications and limitations on the scope of the review undertaken by Evercore as set forth in its written opinion, the consideration to be paid by NortonLifeLock pursuant to the transaction documents was fair, from a financial point of view, to NortonLifeLock. For further discussion about Evercore’s opinion, see the section entitled “Opinion of Evercore — Financial Advisor to NortonLifeLock” beginning on page 47. Following further discussion with and questions from members of the NortonLifeLock board of directors, to which representatives of Evercore and K&E responded, and on the basis of its considerations of, among other things, the matters set forth in the section entitled “Reasons for the Merger” beginning on page 42, the NortonLifeLock board unanimously determined that the Merger and the transactions contemplated thereby, including the issuance of the New NortonLifeLock Shares were fair to and in the best interests of NortonLifeLock and its stockholders and approved the publication of the Rule 2.7 Announcement and the entry into the Co-operation Agreement and the other transaction documentation.
The Avast board of directors had unanimously approved the Merger on August 10, 2021.
On August 10, 2021, the Rule 2.7 Announcement was released and the Co-operation Agreement and other transaction documentation were executed and delivered by the parties.
Reasons for the Merger
The NortonLifeLock board of directors believes that the Merger presents a unique opportunity for NortonLifeLock to execute on its “transforming for growth” strategy and the delivery of its long-term vision by creating a new, global player able to lead the transformation of consumer cyber safety by leveraging the established brands, go-to market reach, technical expertise and innovation of NortonLifeLock and Avast. In reaching its decision to approve the Merger and recommend that NortonLifeLock stockholders approve the issuance of the New NortonLifeLock Shares, after consulting with NortonLifeLock’s management, outside legal counsel and financial advisors, the NortonLifeLock board considered a number of factors including, without limitation, the following (not necessarily in the order of importance):

The strategic and financial rationale of the Merger, including the belief of the NortonLifeLock board of directors that the Merger will:

create a leading global consumer cyber safety business, with the Combined Company having revenues of approximately $3.5 billion (based on the latest reported full year results for each of NortonLifeLock and Avast), an enlarged base of over 500 million users and approximately 40 million direct customers and a common vision to empower digital freedom for everyone;
 
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create a comprehensive suite of complementary consumer cyber safety solutions, delivering giga-scale endpoint visibility, next-generation insights, autonomous defense and personalized protection;

combine Avast’s strength in privacy and NortonLifeLock’s strength in identity to create a broad and complementary product portfolio beyond core security and towards adjacent trust-based solutions;

allow the Combined Company to bring a differentiated approach to the cyber safety segment supported by greater scale in threat visibility, a geographically distributed cloud data platform and advanced AI-based automation;

provide greater geographic diversification and access to a larger global user base, as well as facilitating expansion into the small office/home office and very small business segments and the building of stronger business-to-business-to-consumer and original equipment manufacturer partnerships;

create the potential to accelerate international growth through investment in Avast’s freemium business model and cross-selling of complementary NortonLifeLock identity products, which are currently sold primarily in the United States, to Avast’s international user and direct customer base and cross-selling Avast’s privacy offerings to NortonLifeLock’s full customer base;

unlock significant value creation through approximately $280 million of annual gross cost synergies, providing additional upside potential from new reinvestment capacity for innovation and growth. See the section entitled “Certain Unaudited Prospective Financial Information” beginning on page 55;

bring together two strong and highly experienced consumer-focused management teams with a common culture of excellence and innovation; and

enhance the financial profile of the Combined Company through increased scale, long-term growth and strong free cash flow generation supported by a resilient balance sheet, and is expected to drive double-digit non-GAAP EPS accretion within the first full year following completion of the Merger and double-digit revenue growth in the long-term;

the oral opinion of Evercore, NortonLifeLock’s financial advisor, in connection with the Merger, subsequently confirmed in writing by delivery of a written opinion dated August 10, 2021, to the effect that, as of such date and based upon and subject to the various assumptions made, procedures followed, factors considered, and qualifications and limitations on the scope of the review undertaken by Evercore as set forth in its written opinion, the consideration to be paid by NortonLifeLock in connection with the Merger is fair, from a financial point of view, to NortonLifeLock. See the section entitled “Opinion of Evercore — Financial Advisor to NortonLifeLock” beginning on page 47;

the current and prospective business environment in which NortonLifeLock and Avast operate, including international, national and local economic conditions and the competitive and regulatory environment, and the likely effect of these factors on NortonLifeLock and the Combined Company;

the fact that the fraction of a New NortonLifeLock Share to be issued per Avast Share in respect of each of the (1) Majority Cash Option and (2) Majority Stock Option is fixed and will not adjust in the event that the market price of Avast Shares increases relative to the value of NortonLifeLock Shares;

the scope and results of the due diligence investigations of Avast conducted by NortonLifeLock management and its outside advisors, and the results of those investigations;

NortonLifeLock board of directors’ and NortonLifeLock management’s knowledge of NortonLifeLock’s business, operations, financial condition, and prospects, and its and their understanding of Avast’s business, operations, financial condition, and prospects;

the recommendation of NortonLifeLock’s senior management in favor of the Merger;
 
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the terms and conditions of the Co-operation Agreement and the Rule 2.7 Announcement, which were the result of arms-length negotiations between NortonLifeLock and Avast;

the fact that (i) it is intended that Vincent Pilette, NortonLifeLock’s Chief Executive Officer, will serve as the Chief Executive Officer of the Combined Company, (ii) it is intended that Avast’s Chief Executive Officer, Ondrej Vlcek, will join the Combined Company as President and become a member of the NortonLifeLock board of directors, (iii) Pavel Baudiš, a co-founder of Avast is expected to join the NortonLifeLock board of directors as an independent director, and (iv) it is intended that Natalie Derse, NortonLifeLock’s Chief Financial Officer, will serve as the Chief Financial Officer of the Combined Company;

the fact that the Combined Company will have dual headquarters located in Tempe, Arizona, USA, and Prague, Czech Republic;

the fact that each of the Supporting Shareholders (representing in total 36.93% of the existing issued ordinary share capital of Avast as of the close of business on August 9, 2021, being the latest practicable date prior to the Rule 2.7 Announcement) has irrevocably undertaken to vote in favor of the Scheme in respect of its entire beneficial holding of Avast Shares, subject to certain exceptions, and that, subject to certain exceptions, each of the directors of Avast who holds Avast Shares (representing in aggregate approximately 35.96% of the existing issued ordinary share capital of Avast as of the close of business on August 9, 2021) has undertaken to elect the Majority Stock Option in respect of their entire beneficial holdings of Avast Shares;

NortonLifeLock’s right to engage in or otherwise participate in discussions or negotiations with a third party that makes an unsolicited bona fide Alternative Proposal (as defined below) or furnish information (including non-public information) pursuant to a confidentiality agreement to such third party, if the NortonLifeLock board determines in good faith (after consultation with its outside legal counsel and financial advisors) that the terms of such Alternative Proposal (as defined below) are more favorable from a financial point of view to NortonLifeLock’s stockholders than the Merger, taking into account all relevant factors, and the failure to take such action would be inconsistent with NortonLifeLock directors’ fiduciary duties under applicable law. See the section entitled “No Solicitation of Alternative Proposals” beginning on page 64;

the NortonLifeLock board of directors’ right, under specified circumstances, to withdraw, withhold or qualify (or amend or modify in any manner adverse to Avast) its recommendation that the NortonLifeLock stockholders approve the Share Issuance Proposal, subject to payment by NortonLifeLock of a Break Payment. See the sections entitled “Change in Board Recommendation” beginning on page 65 and “Break Payments” beginning on page 62;

the likelihood that the Merger will be completed, including after consideration of antitrust and other regulatory laws and the risks related to certain conditions and requirements that may be imposed by regulators to obtain clearances and authorizations; and

the condition to the Merger that the issuance of the New NortonLifeLock Shares in connection with the Merger must be approved by the NortonLifeLock stockholders.
In the course of its consideration of the Merger, the NortonLifeLock board of directors also considered a variety of negative factors associated with the Merger, including, without limitation, the following (not necessarily in the order of importance):

the fact that the fraction of a New NortonLifeLock Share to be issued per Avast Share in respect of each of the (1) Majority Cash Option and (2) Majority Stock Option is fixed and will not adjust in the event that the market price of NortonLifeLock Shares increases relative to the value of Avast Shares;

the dilution of the ownership interests of NortonLifeLock’s current shareholders in NortonLifeLock that will result from the issuance of the New NortonLifeLock Shares to Avast shareholders in the Merger;

the risk that the Merger might not be completed in a timely manner or at all, including the risk that failure to complete the Merger could cause NortonLifeLock to incur significant expenses and lead to negative perceptions among investors;
 
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the fact that NortonLifeLock will incur substantial indebtedness in connection with the Merger that could adversely affect the Combined Company, its financial position and the potential benefits of the Merger, as well as its future ability to access debt capital markets;

the fact that NortonLifeLock will likely not know the elections of the majority of the Avast shareholders as between the Majority Cash Option and Majority Stock Option until shortly prior to completion of the Merger;

the fact that, under specified circumstances, NortonLifeLock may be required to pay a Break Payment of up to $300 million under the Co-operation Agreement upon the occurrence of certain events. See the section entitled “Break Payments” beginning on page 62;

the limitations imposed by the Co-operation Agreement on the circumstances under which the NortonLifeLock board of directors may withdraw, withhold or qualify (or amend or modify in any manner adverse to Avast) its recommendation that the NortonLifeLock stockholders approve the Share Issuance Proposal. See the section entitled “Change in Board Recommendation” beginning on page 65;

the fact that Avast’s shareholders may not approve the Merger at the General Meeting;

the fact that the UK Takeover Code significantly limited the contractual commitments that could be obtained from Avast in favor of NortonLifeLock to take actions in furtherance of the Merger;

the fact that the Avast board of directors may, if it considers that its fiduciary duties so require, withdraw its recommendation of the Merger at any time;

the fact that the UK Takeover Code does not permit Avast to pay any break payment to NortonLifeLock (including if the Avast board of directors withdraws its recommendation of the Merger), and does not permit Avast to be subject to any contractual restrictions or obligations in favor of NortonLifeLock on soliciting or negotiating other offers or transactions involving Avast (save for certain restrictions under the UK Takeover Code on the Avast board taking actions or entering into agreements that may result in NortonLifeLock’s offer for Avast being frustrated or in Avast shareholders being denied the opportunity to decide on its merits);

the potential length of the regulatory approval process and the fact that the receipt of regulatory clearances and authorizations required by the Merger may be subject to conditions, limitations, or restrictions that could negatively impact the business and operations of the Combined Company;

the risk that Avast’s financial performance may not meet NortonLifeLock’s expectations;

the risk of diverting NortonLifeLock’s and Avast’s respective management teams’ focus and resources from operational matters and other strategic opportunities while working to complete the Merger and integrate NortonLifeLock and Avast;

the challenges inherent in the combination and integration of two businesses of the size and scope of NortonLifeLock and Avast, including as a result of Avast’s operations outside the United States and the possibility that the anticipated estimated cost savings, synergies and other benefits sought to be obtained by the Merger might not be achieved in the time frame contemplated or at all;

the potential adverse impact that business uncertainty pending the completion of the Merger could have on NortonLifeLock’s and Avast’s ability to attract, retain, and motivate key personnel until the completion of the Merger;

the fact that the Co-Operation Agreement places certain restrictions on NortonLifeLock in the period before the Effective Date, although limited in scope, which could impact NortonLifeLock’s operations and actions until the earlier of the completion of the Merger and the termination of the Co-operation Agreement;

the fact that the UK Takeover Code provides that conditions to the Merger may only be invoked (so as to cause the Merger not to proceed, to lapse or be withdrawn) with the Panel’s consent, and that, with respect to certain conditions (including any regulatory or antitrust conditions), the Panel will normally only give its consent to the invocation of a condition where the circumstances
 
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underlying the invocation of the condition are of material significance to NortonLifeLock and Bidco in the context of the Merger, and that there is no assurance the Panel would provide such consent;

the outcome of any legal proceedings, to the extent initiated against NortonLifeLock, Bidco, Avast or others relating to the Merger; and

the risks of the type and nature described in the sections of this proxy statement entitled “Risk Factors” beginning on page 18 and “Cautionary Note Regarding Forward-Looking Statements” beginning on page 17.
The NortonLifeLock board of directors determined that, balancing the positive and negative considerations involved in the Merger, the potential benefits of the Merger substantially outweighed its risks and uncertainties.
The foregoing discussion of factors considered by the NortonLifeLock board of directors is not intended to be exhaustive, but includes the material factors considered by the NortonLifeLock board of directors. In light of the variety of factors considered in connection with its evaluation of the Merger, the NortonLifeLock board of directors did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determinations and recommendations. Moreover, each member of the NortonLifeLock board of directors applied his or her own personal business judgment to the process and may have given different weight to different factors. The NortonLifeLock board of directors did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. Instead, the NortonLifeLock board of directors based its recommendation on the totality of the information presented.
In considering the recommendation of the NortonLifeLock board of directors, you should be aware that certain directors and executive officers of NortonLifeLock may have interests in the Merger that are different from, or in addition to, interests of shareholders of NortonLifeLock generally and may create potential conflicts of interest. The NortonLifeLock board of directors was aware of these interests and considered them when evaluating and negotiating the Rule 2.7 Announcement, the Co-operation Agreement and the other transactions contemplated thereby, and in recommending to NortonLifeLock’s shareholders that they vote in favor of the Share Issuance Proposal. See the section entitled “Common Stock Ownership of Directors and Executive Officers” beginning on page 30.
This discussion of NortonLifeLock’s reasons for the Merger is forward-looking in nature and should be read in light of the factors discussed in the sections of this proxy statement entitled See the sections entitled “Cautionary Note Regarding Forward-Looking Statements” beginning on page 17 and “Risk Factors — Risks Related to the Merger” beginning on page 18.
Recommendation of NortonLifeLock’s Board of Directors
Based on the reasons for the recommendations discussed below in the section entitled “Information About the Merger — Reasons for the Merger,” the members of the board of directors of NortonLifeLock determined that the Merger and the other matters contemplated by the Rule 2.7 Announcement and the Co-operation Agreement are fair to and in the best interests of NortonLifeLock and its stockholders and have authorized and approved the issuance of the New NortonLifeLock Shares to Avast shareholders in connection with the Merger. The NortonLifeLock board of directors unanimously recommends that NortonLifeLock stockholders vote FOR the Share Issuance Proposal and “FOR” the Adjournment Proposal.
Opinion of Evercore — Financial Advisor to NortonLifeLock
Evercore Group L.L.C. (“Evercore”) was retained by NortonLifeLock to act as its financial advisor and to render a fairness opinion in connection with the Merger. NortonLifeLock selected Evercore to act as its financial advisor because of Evercore’s qualifications and experience in providing strategic and financial advisory services in comparable transactions and Evercore’s reputation. At a meeting of the NortonLifeLock board of directors held to evaluate the Merger on August 10, 2021, Evercore rendered
 
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its oral opinion, which was subsequently confirmed in writing, to the NortonLifeLock board of directors to the effect that, as of such date and based upon and subject to the various assumptions made, procedures followed, factors considered, and qualifications and limitations on the scope of the review undertaken by Evercore as set forth in its written opinion, the consideration to be paid by NortonLifeLock pursuant to the Merger documents was fair, from a financial point of view, to NortonLifeLock.
The full text of Evercore’s written opinion to the NortonLifeLock board of directors, dated August 10, 2021, is attached as Annex C to this proxy statement and is incorporated herein by reference in its entirety. NortonLifeLock stockholders should read the opinion in its entirety for a discussion of the various assumptions made, procedures followed, matters considered, and qualifications and limitations on the scope of review undertaken by Evercore in rendering its opinion. This summary is qualified in its entirety by reference to the full text of such opinion. Evercore’s opinion was directed to the NortonLifeLock board of directors and addressed only the fairness, from a financial point of view, to NortonLifeLock, as of the date of the opinion, of the consideration to be paid by NortonLifeLock pursuant to the Merger documents. Evercore’s opinion did not address any other aspects of the Merger and did not and does not constitute a recommendation to the NortonLifeLock board of directors or to any other persons in respect of the Merger, including as to how any holder of NortonLifeLock shares should vote or act in respect of the Merger.
In connection with rendering its opinion, Evercore:

reviewed certain publicly available business and financial information relating to each of Avast and NortonLifeLock that Evercore deemed to be relevant, including publicly available research analysts’ estimates;

reviewed certain publicly available projected financial and operating data relating to NortonLifeLock and Avast and extrapolations thereof, which were approved for Evercore’s use by NortonLifeLock’s management, as more fully described in the section entitled “Certain Unaudited Prospective Financial Information” beginning on page 55 (the “Public Forecasts”);

discussed the past and current operations, Public Forecasts and current financial condition of Avast with senior executives of NortonLifeLock and Avast (including their views on the risks and uncertainties of achieving such projections);

discussed the past and current operations, Public Forecasts and current financial condition of NortonLifeLock with senior executives of NortonLifeLock (including their views on the risks and uncertainties of achieving such projections);

reviewed certain estimates and other information relating to certain strategic, financial and operational benefits anticipated from the Merger, which were prepared, and approved for Evercore’s use, by the management of NortonLifeLock (the “Projected Synergies”), as more fully described in the section entitled “Certain Unaudited Prospective Financial Information’” beginning on page 55;

at the direction of NortonLifeLock’s management, utilized consensus estimates with respect to the future performance of NortonLifeLock and Avast and extrapolations thereof, which were approved for Evercore’s use by NortonLifeLock’s management;

reviewed the pro forma impact of the Merger on NortonLifeLock’s earnings per share and certain other financial metrics;

reviewed the reported prices and the historical trading activity of the Avast Shares and NortonLifeLock shares of common stock;

compared the financial performance of Avast and NortonLifeLock and their respective stock market trading multiples with those of certain other publicly traded companies that Evercore deemed relevant;

participated in certain discussions and negotiations among representatives of NortonLifeLock and Avast and their financial and legal advisors;
 
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reviewed the financial terms and conditions of the Merger documents and certain related documents; and

performed such other analyses and examinations and considered such other factors that Evercore deemed appropriate.
For purposes of its analysis and opinion, Evercore assumed and relied upon, without any independent verification of such information, the accuracy and completeness of the financial and other information publicly available and all of the information supplied or otherwise made available to, discussed with, or reviewed by Evercore, and Evercore assumed no responsibility or liability therefor. Evercore further relied upon the assurances of the managements of NortonLifeLock and Avast that they are not aware of any facts or circumstances that would make such information inaccurate or misleading. At NortonLifeLock’s direction, in connection with the Merger, for purposes of rendering Evercore’s opinion, Evercore was not provided with any financial forecasts relating to the future performance of Avast or NortonLifeLock prepared by Avast’s management or NortonLifeLock’s management (other than with respect to the Projected Synergies) and, at NortonLifeLock’s direction, Evercore’s analyses relating to the business and financial prospects of Avast and NortonLifeLock for purposes of Evercore’s opinion were made on the bases of the Public Forecasts and the Projected Synergies.
With respect to the projected financial data relating to Avast and NortonLifeLock referred to above, including those relating to the Public Forecasts, the Projected Synergies and other benefits anticipated by the management of NortonLifeLock to be realized from the Merger, Evercore assumed, with NortonLifeLock’s consent, that they were reasonably prepared on bases reflecting the best then currently available estimates and good faith judgments of the management of NortonLifeLock as to the future financial performance of Avast and NortonLifeLock, and such Projected Synergies and other benefits. Without limiting the report of Evercore Partners International LLP included in the Rule 2.7 Announcement with respect to the anticipated quantified financial benefits of the Merger, Evercore expresses no view as to any projected financial data relating to Avast and NortonLifeLock, including the Public Forecasts, or the Projected Synergies or the assumptions on which they were based. Evercore relied, at NortonLifeLock’s direction, without independent verification, upon the assessments of management of NortonLifeLock as to whether the Projected Synergies and benefits, operating synergies and other strategic benefits, including the amounts and timing of realization thereof, anticipated by management of NortonLifeLock to be realized from the Merger were reasonable.
For purposes of Evercore’s analysis and opinion, Evercore assumed, in all respects material to its analysis, that the final executed Merger documents would not differ from the draft Merger documents reviewed by Evercore, that the representations and warranties of each party contained in the Merger documents were true and correct, that each party would perform all of the covenants and agreements required to be performed by it under the Merger documents and that all conditions to the consummation of the Merger would be satisfied without waiver or modification thereof. Evercore further assumed that all governmental, regulatory or other consents, approvals or releases necessary for the consummation of the Merger would be obtained without any delay, limitation, restriction or condition that would have an adverse effect on NortonLifeLock, Avast or the consummation of the Merger or reduce the contemplated benefits to NortonLifeLock of the Merger, in each case to the extent material to Evercore’s analysis. Evercore did not express any opinion as to any tax or other consequences that might result from the Merger, nor did Evercore’s opinion address any legal, tax, regulatory or accounting matters, as to which Evercore understood that NortonLifeLock had obtained such advice as it deemed necessary from qualified professionals.
Evercore did not conduct a physical inspection of the properties or facilities of NortonLifeLock or Avast and did not make or assume any responsibility for making any independent valuation or appraisal of the respective assets or liabilities of NortonLifeLock or Avast, nor was Evercore furnished with any such valuations or appraisals, nor did Evercore evaluate the solvency or fair value of NortonLifeLock or Avast under any state or federal laws relating to bankruptcy, insolvency or similar matters. Evercore’s opinion is necessarily based upon information made available to Evercore as of the date of its opinion and financial, economic, market and other conditions as they existed and as could be evaluated on the date of its opinion. It is understood that subsequent developments may affect Evercore’s opinion and that Evercore does not have any obligation to update, revise or reaffirm its opinion.
 
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Evercore was not asked to pass upon, and expressed no opinion with respect to, any matter other than the fairness to NortonLifeLock, from a financial point of view, of the consideration. Evercore did not express any view on, and its opinion did not address, the fairness of the Merger to, or any consideration received in connection therewith by, the holders of any class of securities, creditors or other constituencies of NortonLifeLock or Avast, nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of NortonLifeLock or Avast, or any class of such persons, whether relative to the consideration or otherwise.
Evercore was not asked to, nor did Evercore express any view on, and Evercore’s opinion did not address, any other term or aspect of the Merger documents or the Merger, including, without limitation, the structure or form of the Merger, or any term, aspect or undertaking of any other agreement or instrument contemplated by the Co-operation Agreement or entered into or amended in connection with the Co-operation Agreement. Evercore assumed that any modification to the structure of the Merger would not vary in any respect material to Evercore’s analysis. Evercore’s opinion did not address the relative merits of the Merger as compared to other business or financial strategies that might be available to NortonLifeLock, nor did it address the underlying business decision of NortonLifeLock to engage in the Merger.
Evercore did not express any view on, and Evercore’s opinion did not address, what the value of the shares of NortonLifeLock common stock actually would be when issued or the prices at which the shares of NortonLifeLock common stock would trade at any time, including following announcement or consummation of the Merger. Evercore did not express any opinion as to the prices at which the shares of NortonLifeLock or Avast will trade at any time, as to the potential effects of volatility in the credit, financial and stock markets on Avast or the Merger or as to the impact of the Merger on the solvency or viability of Avast or the ability of Avast to pay its obligations when they come due. Evercore is not a legal, regulatory, accounting or tax expert and Evercore assumed the accuracy and completeness of assessments by NortonLifeLock and its advisors with respect to legal, regulatory, accounting and tax matters.
Summary of Material Financial Analysis
Set forth below is a summary of the material financial analyses reviewed by Evercore with the NortonLifeLock board of directors on August 10, 2021 in connection with rendering its opinion. The following summary, however, does not purport to be a complete description of the analyses or data presented by Evercore. The order of the analyses described and the results of these analyses do not represent relative importance or weight given to these analyses by Evercore. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data that existed on or before August 6, 2021 (the last full trading date prior to the rendering of Evercore’s opinion), except in the case of the share price of NortonLifeLock and Avast, which is based on the closing share price as of the last unaffected date prior to the first public reports of a potential Merger involving NortonLifeLock and Avast which dates were July 13, 2021 and July 14, 2021, respectively, and, in each case, such market data is not necessarily indicative of current market conditions. For purposes of its financial analyses summarized below, Evercore assumed that, based on the commitments of the Avast directors, including the founders and their related trusts, who collectively owned approximately 36% of Avast Shares on a fully diluted basis as of the date Evercore rendered its opinion, the minimum and maximum aggregate amounts that could be payable by NortonLifeLock as consideration (the “Consideration”) in the Merger pursuant to the Merger documents would be (1) a cash payment of approximately $2.5 billion and the issuance of approximately 205 million New NortonLifeLock Shares and (2) a cash payment of approximately $6.1 billion and the issuance of approximately 93 million New NortonLifeLock Shares. In connection with its financial analyses summarized below, Evercore further assumed a currency exchange rate of GBP converted to USD at 1.3866x based on the exchange rates in effect as of August 6, 2021.
For purposes of its analyses, Evercore considered general business, economic, market and financial conditions, industry sector performance, and other matters, as they existed and could be evaluated as of the date of its opinion, many of which are beyond the control of NortonLifeLock, Avast and their respective advisors. The estimates contained in Evercore’s analyses and reviews and the ranges of
 
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valuations resulting from any particular analysis or review are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by Evercore’s analyses and reviews. In addition, analyses and reviews relating to the value of companies, businesses or securities do not purport to be appraisals or to reflect the prices at which companies, businesses or securities actually may be sold. Accordingly, the estimates used in, and the results derived from, Evercore’s analyses and reviews are inherently subject to substantial uncertainty, and Evercore assumes no responsibility if future results are materially different from those forecasted in such estimates.
The following summary of Evercore’s financial analyses includes information presented in tabular format. In order to fully understand Evercore’s analyses, the tables should be read together with the full text of each summary. The tables are not intended to stand alone and alone do not constitute a complete description of Evercore’s financial analyses. Considering the tables below without considering the full narrative description of Evercore’s financial analyses, including the methodologies and assumptions underlying such analyses, could create a misleading or incomplete view of such analyses.
Selected Publicly Traded Companies Analyses
In performing a selected publicly traded companies analysis of Avast and NortonLifeLock, Evercore reviewed publicly available financial and market information for a selection of public companies appearing in the list below (the “Selected Public Companies”). Although none of the Selected Public Companies is directly comparable to NortonLifeLock or Avast (with the exception of NortonLifeLock in the case of NortonLifeLock and Avast in the case of Avast), Evercore selected the Selected Public Companies that, based on its professional judgment and experience, Evercore deemed most relevant to consider in relation to NortonLifeLock and Avast, because they are public companies and each Selected Public Company has operations that, for purposes of this analysis, Evercore considered similar to the operations of one or more of the business lines of NortonLifeLock and/or Avast.

Avast PLC

NortonLifeLock Inc.

McAfee Corp. (“McAfee”)

Check Point Software Technologies Ltd

Trend Micro Inc.
For each of the Selected Public Companies, Evercore calculated (i) enterprise value as a multiple of estimated earnings before interest, taxes, depreciation and amortization (“EBITDA”) for calendar years 2021 and 2022 and (ii) Price as a multiple of estimated earnings for each of the Selected Public Companies for calendar years 2021 and 2022 (P/E). For purposes of this analysis, for each Selected Public Company Evercore used the closing price (“Price”) of each Selected Public Company as of August 6, 2021, with the exception of McAfee, NortonLifeLock and Avast, each of which were included as of the last unaffected date prior to the first public reports of a potential Merger involving NortonLifeLock and Avast which was, in the case of McAfee and NortonLifeLock, July 13, 2021 and, in the case of Avast, July 14, 2021. Financial data regarding each company’s outstanding equity securities, total debt, preferred equity, non-controlling interest and cash and cash equivalents were derived from the most recent filings made by such company with the SEC, and/or publicly available research analysts’ estimates (other than NortonLifeLock and Avast, which were based on the Consensus Financial Projections (as defined below) and, in the case of the number of fully diluted Avast Shares and NortonLifeLock shares of common stock, as provided by NortonLifeLock’s management) and such financial data was further subject to (i) in the case of NortonLifeLock, the inclusion of capitalized research and development and software development costs by Evercore for purposes of calculating NortonLifeLock’s EBITDA for purposes of this analysis and (ii) in the case of McAfee, certain adjustments to the calculation of McAfee’s EBITDA in order to address the pro forma impact of the previously announced divestiture of McAfee’s enterprise business.
 
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Avast
Fiscal Year (“FY”) 2022E EBITDA.   Based on the multiples it derived for the Selected Public Companies and based on its professional judgment and experience, Evercore applied an enterprise
value/FY 2022E EBITDA multiple reference range of 11.5x to 14.5x to Avast’s estimated FY 2022E EBITDA based on the Consensus Financial Projections. Based on this range of implied enterprise values, and Avast’s estimated net debt (calculated as total debt less cash and cash equivalents) as of June 30, 2021 and the number of fully diluted shares of Avast, in each case as provided by NortonLifeLock’s management, this analysis indicated a range of equity values per Avast Share on a standalone basis of £4.06 to £5.21.
FY 2022 P/E.   Based on the multiples it derived for the Selected Public Companies and based on its professional judgment and experience, Evercore applied a Price/Earnings multiple reference range of 14.5x to 18.5x to Avast’s estimated FY 2022 net income based on the Consensus Financial Projections. Based on this range of implied equity values and the number of fully diluted shares of Avast, as provided by NortonLifeLock’s management, this analysis indicated a range of equity values per Avast Share on a standalone basis of £4.09 to £5.21.
NortonLifeLock
CY 2022E EBITDA.   Based on the multiples it derived for the Selected Public Companies and based on its professional judgment and experience, Evercore applied an enterprise value/2022E EBITDA multiple reference range of 11.5x to 14.5x to NortonLifeLock’s estimated 2022E EBITDA based on the Consensus Financial Projections. Based on this range of implied enterprise values, and NortonLifeLock’s estimated net debt (calculated as total debt less cash and cash equivalents) as of July 2, 2021 and the number of fully diluted shares of NortonLifeLock, in each case as provided by NortonLifeLock’s management, this analysis indicated a range of equity values per share of NortonLifeLock Common Stock on a standalone basis of $25.16 to $32.50.
CY 2022 P/E.   Based on the multiples it derived for the Selected Public Companies and based on its professional judgment and experience, Evercore applied a Price/Earnings multiple reference range of 14.5x to 18.5x to NortonLifeLock’s estimated 2022 net income based on the Consensus Financial Projections. Based on this range of implied equity values and the number of fully diluted shares of NortonLifeLock, as provided by NortonLifeLock’s management, this analysis indicated a range of equity values per share of NortonLifeLock shares of common stock on a standalone basis of $26.16 to $33.09.
Discounted Cash Flow Analysis
Avast
Evercore performed a discounted cash flow analysis of Avast to calculate the estimated present value of the standalone unlevered, after-tax free cash flows that Avast was forecasted to generate during Avast’s fiscal years 2021 through 2026 based on the Consensus Financial Projections (the “Avast Standalone DCF”). Evercore calculated terminal values for Avast by applying a range of perpetuity growth rates of 2.0% to 3.0%, which range was selected by Evercore based on Evercore’s professional judgment and experience, to the projected standalone unlevered, after-tax free cash flows of Avast in the terminal year (which analysis implied terminal year EBITDA multiples ranging from 10.8x to 15.2x based on the Consensus Financial Projections).
The cash flows and the terminal value were then discounted to present value using a discount rate of 8.0% to 9.0%, based on an estimate of Avast’s weighted average cost of capital, to derive a range of implied enterprise values for Avast. Based on the derived ranges of implied enterprise values, Evercore then calculated a range of implied equity values by reducing the range of implied enterprise values by the amount of Avast’s net debt (calculated as total debt and certain other debt-like items less cash) as of June 30, 2021, and the number of fully diluted shares of Avast, in each case as provided to Evercore by NortonLifeLock’s management. Based on the above described analysis, Evercore derived a range of implied equity values per Avast Share on a standalone basis of £4.21 to £5.79.
 
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Using the same method as described above for the Avast Standalone DCF, Evercore also performed a discounted cash flow analysis of Avast to calculate the estimated present value of the unlevered, after-tax free cash flows that Avast was forecasted to generate during Avast’s fiscal years 2021 through 2026 based on the Consensus Financial Projections and by taking into account the estimated synergies, as prepared and approved for Evercore’s use by NortonLifeLock’s management. Evercore calculated a range of implied values of the estimated run-rate cost synergies by applying a perpetuity growth rate of 2.5% to the estimated synergies. Evercore then calculated the implied value of the estimated synergies per Avast Share by dividing the range of implied values of the estimated run-rate cost synergies by the number of fully diluted outstanding Avast Shares, as provided and approved for Evercore’s use by NortonLifeLock’s management. Evercore then added to the implied share prices of Avast Shares on a standalone basis (as calculated above) the implied value of the estimated synergies per Avast Share. Based on the above described analysis, Evercore derived a range of implied equity values per Avast Share including the impact of the estimated synergies described above of £6.18 to £8.15.
NortonLifeLock
Evercore performed a discounted cash flow analysis of NortonLifeLock to calculate the estimated present value of the standalone unlevered, after-tax free cash flows that NortonLifeLock was projected to generate from fiscal year 2022 through fiscal year 2027, in each case, based on the Consensus Financial Projections. Evercore also calculated a terminal value for NortonLifeLock by applying a range of perpetuity growth rates of 2.0% to 3.0%, which range was selected by Evercore based on Evercore’s professional judgment and experience, to the projected standalone unlevered, after-tax free cash flows of NortonLifeLock in the terminal year (which implied terminal year EBITDA multiples ranging from 10.9x to 15.3x based on the Consensus Financial Projections).
The cash flows and the terminal value were then discounted to present value using a discount rate of 8.0% to 9.0%, based on an estimate of NortonLifeLock’s weighted average cost of capital, to derive a range of implied enterprise values for NortonLifeLock. Based on the range of implied enterprise values, a range of implied equity values for NortonLifeLock was then calculated by reducing the range of implied enterprise values by the amount of NortonLifeLock’s projected net debt (calculated as debt less cash and equity investments) as of July 2, 2021, and the number of fully diluted shares of NortonLifeLock, in each case as provided to Evercore by NortonLifeLock’s management. Based on the above described analysis, Evercore derived a range of implied equity values per share of NortonLifeLock common stock on a standalone basis of $25.80 to $35.63.
Other Factors
Evercore also reviewed and considered other factors, which were not considered material to its financial analyses in connection with rendering its advice, but were referenced for informational purposes only, including, among other things, the following:
Last 52-Week Trading Range
Avast
Evercore reviewed historical trading prices of shares of Avast during the twelve month period ended July 14, 2021, noting that the low and high closing prices during such period ranged from £4.18 to £6.05 per share of Avast, respectively.
NortonLifeLock
Evercore reviewed historical trading prices of shares of NortonLifeLock common stock during the twelve month period ended July 13, 2021, noting that the low and high closing prices during such period ranged from $17.98 to $28.92 per share of NortonLifeLock common stock, respectively.
Equity Research Analyst Price Targets
Avast
Evercore reviewed selected public market trading price targets for the shares of Avast prepared and published by equity research analysts that were publicly available as of July 14, 2021, which was the last
 
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unaffected date prior to the announcement of a potential Merger including NortonLifeLock and Avast. These price targets reflect analysts’ estimates of the future public market trading price of the shares of Avast at the time the price target was published. As of July 14, 2021, the range of selected equity research analyst price targets per share of Avast was £3.55 to £6.80. Public market trading price targets published by equity research analysts do not necessarily reflect current market trading prices for the shares of Avast and these target prices and the analysts’ earnings estimates on which they were based are subject to risk and uncertainties, including factors affecting the financial performance of Avast and future general industry and market conditions.
NortonLifeLock
Evercore reviewed selected public market trading price targets for the shares of NortonLifeLock common stock prepared and published by equity research analysts that were publicly available as of July 13, 2021, which was the last unaffected date prior to the first public reports of a potential Merger including NortonLifeLock and Avast. These price targets reflect analysts’ estimates of the future public market trading price of the shares of NortonLifeLock common stock at the time the price target was published. As of July 13, 2021, the range of selected equity research analyst price targets per share of NortonLifeLock common stock was $21.00 to $32.00. Public market trading price targets published by equity research analysts do not necessarily reflect current market trading prices for the shares of NortonLifeLock common stock and these target prices and the analysts’ earnings estimates on which they were based are subject to risk and uncertainties, including factors affecting the financial performance of NortonLifeLock and future general industry and market conditions.
Premiums Paid Analysis
Using publicly available information, Evercore reviewed and analyzed all acquisitions of targets listed on the main market for listed securities or the AIM Market of the London Stock Exchange, and governed by the UK Takeover Code (but excluding all-share transactions, transactions where the offeror was already a majority shareholder in the offeree and transactions of equity value less than £100 million) announced since January 1, 2007. Based on its professional judgment and premia in the precedent transactions assessed, Evercore applied a reference range of 30.0% to 50.0% to the Avast unaffected share price as of July 14, 2021 of £5.04. This analysis indicated a range of implied equity values per share of Avast Share of £6.55 to £7.56.
Evercore also reviewed and analyzed selected U.K. mergers and all-share acquisitions announced since January 1, 2012. Based on its professional judgment and premia in the precedent transactions assessed, Evercore applied a reference range of 20.0% to 30.0%, based on all-share takeover transactions with an average acquirer / target pro forma ownership of approximately 70% / 30%, to the Avast unaffected share price as of July 14, 2021 of £5.04. This analysis indicated a range of implied equity values per share of Avast Shares of £6.05 to £6.55.
Miscellaneous
The foregoing summary of Evercore’s financial analyses does not purport to be a complete description of the analyses or data presented by Evercore to the NortonLifeLock board of directors. In connection with the review of the Merger by the NortonLifeLock board of directors, Evercore performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary described above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Evercore’s opinion. In arriving at its fairness determination, Evercore considered the results of all the analyses and did not draw, in isolation, conclusions from or with regard to any one analysis or factor considered by it for purposes of its opinion. Rather, Evercore made its determination as to fairness on the basis of its professional judgment and experience after considering the results of all the analyses. In addition, Evercore may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses
 
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described above should not be taken to be the view of Evercore with respect to the value of NortonLifeLock on a standalone basis, Avast on a standalone basis, or NortonLifeLock and Avast on a combined basis. Furthermore, rounding may result in total sums set forth in this section not equaling the total of the figures shown.
Evercore prepared these analyses for the purpose of providing an opinion to the NortonLifeLock board of directors as to the fairness, from a financial point of view, of the Consideration to be paid by NortonLifeLock pursuant to the Merger documents. These analyses do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold. Any estimates contained in these analyses are not necessarily indicative of actual future results, which may be significantly more or less favorable than those suggested by such estimates. Accordingly, estimates used in, and the results derived from, Evercore’s analyses are inherently subject to substantial uncertainty, and Evercore assumes no responsibility if future results are materially different from those forecasted in such estimates.
Evercore’s financial advisory services and its opinion were provided for the information and benefit of the NortonLifeLock board of directors (in its capacity as such) in connection with its evaluation of the Merger. The issuance of Evercore’s opinion was approved by an Opinion Committee of Evercore.
Evercore did not recommend any specific amount or type of consideration to the NortonLifeLock board of directors or NortonLifeLock management or that any specific amount or type of consideration constituted the only appropriate consideration in the Merger.
Pursuant to the terms of Evercore’s engagement letter with NortonLifeLock, NortonLifeLock has agreed to pay Evercore a fee for its services in the amount of $18 million, of which $4 million became payable upon delivery of Evercore’s opinion, and the balance of which will be payable contingent upon the consummation of the Merger. In addition, one or more additional fees may be payable by NortonLifeLock to Evercore if: (i) during the period from the announcement of the Merger on August 10, 2021 and the date that is six months following the consummation of the Merger the average closing price per share of NortonLifeLock common stock is equal to or greater than $30.00 per share for twenty consecutive trading days, in which case NortonLifeLock will pay Evercore $5 million and (ii) during the period from the announcement of the Merger on August 10, 2021 and the date that is twelve months following the consummation of the Merger the average closing price per share of NortonLifeLock common stock is equal to or greater than $35.00 per share for twenty consecutive trading days, in which case NortonLifeLock will pay Evercore $7 million. In addition, NortonLifeLock has agreed to reimburse Evercore for its reasonable expenses (including expenses relating to research, third party data fees and legal fees, expenses and disbursements) incurred in connection with its engagement and to indemnify Evercore and any of its affiliates, or any of the members, partners, officers, directors, advisors, representatives, employees, agents, or controlling persons, if any, of Evercore or any such affiliate, against certain liabilities and expenses arising out of Evercore’s engagement, any services performed by Evercore in connection therewith or any transaction contemplated thereby.
During the two-year period prior to the delivery of its opinion, other than in connection with the Merger, no material relationship existed between Evercore Group L.L.C. and its affiliates and either NortonLifeLock or Avast pursuant to which compensation was received by Evercore Group L.L.C. or its affiliates as a result of such a relationship. Evercore may provide financial advisory or other services to NortonLifeLock, Avast and their respective affiliates in the future and in connection with any such services Evercore may receive compensation.
Evercore and its affiliates engage in a wide range of activities for its and their own accounts and the accounts of customers, including corporate finance, mergers and acquisitions, equity sales, trading and research, private equity, placement agent, asset management and related activities. In connection with these businesses or otherwise, Evercore and its affiliates and/or its or their respective employees, as well as investment funds in which any of them may have a financial interest, may at any time, directly or indirectly, hold long or short positions and may trade or otherwise effect transactions for their own accounts or the accounts of customers, in debt or equity securities, senior loans and/or derivative products or other financial instruments of or relating to NortonLifeLock, Avast, other potential parties to
 
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the Merger and/or any of their respective affiliates or persons that are competitors, customers or suppliers of NortonLifeLock or Avast.
The NortonLifeLock board of directors engaged Evercore to act as a financial advisor because of Evercore’s qualifications and experience in providing strategic and financial advisory services in comparable transactions and Evercore’s reputation. Evercore is an internationally recognized investment banking firm and is regularly engaged in the valuation of businesses in connection with mergers and acquisitions, leveraged buyouts, competitive biddings, private placements and valuations for corporate and other purposes.
Certain Unaudited Prospective Financial Information
In connection with NortonLifeLock’s evaluation of the Merger, NortonLifeLock directed Evercore to use and approved the use by Evercore, in each case, in connection with the financial analysis prepared by Evercore and Evercore’s opinion summarized in the section entitled “Opinion of Evercore — Financial Advisor to NortonLifeLock”, of certain publicly available consensus financial forecasts to March 29, 2024 (in the case of NortonLifeLock) and December 31, 2023 (in the case of Avast) and extrapolations thereof for fiscal years 2025 through 2027 (in the case of NortonLifeLock) and 2024 through 2026 (in the case of Avast). We refer to such financial forecasts and extrapolations thereof collectively as the “Consensus Financial Projections.” The Consensus Financial Projections were also shared with the board of directors of NortonLifeLock. The consensus financial forecasts were not internally prepared or adopted by NortonLifeLock’s management, but are an average of certain financial forecasts prepared by independent research analysts not affiliated with NortonLifeLock, for purposes unrelated to the management of NortonLifeLock’s business or the Merger. The extrapolations were prepared on the basis of those publicly available consensus financial forecasts, using revenue growth rates and percentages of revenue as appropriate. At the direction of NortonLifeLock’s management, NortonLifeLock’s financial advisor, Evercore, relied upon the Consensus Financial Projections, as NortonLifeLock’s management reviewed the Consensus Financial Projections and approved the use of the Consensus Financial Projections by Evercore in connection with the financial analysis prepared by Evercore and Evercore’s opinion summarized in the section entitled “Opinion of Evercore — Financial Advisor to NortonLifeLock”.
NortonLifeLock’s management does not as a matter of course make public projections as to future performance, revenues, earnings or other results beyond the current fiscal year due to, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. NortonLifeLock is especially reluctant to disclose projections for extended periods due to the increasing uncertainty, unpredictability and subjectivity of such assumptions and estimates when applied to time periods further in the future. As a result, NortonLifeLock does not endorse the unaudited prospective financial information included in this proxy statement as a reliable indication of future results.
The Consensus Financial Projections are subjective in many respects and thus subject to interpretation. While presented with numeric specificity, the Consensus Financial Projections reflect a number of estimates and assumptions with respect to industry performance and competition, general business, economic, market and financial conditions and matters specific to NortonLifeLock’s and Avast’s respective businesses, including the factors listed under “Risk Factors” beginning on page 18, all of which are difficult to predict and many of which are beyond NortonLifeLock’s or Avast’s respective control. Important factors that may affect actual results and cause these financial forecasts to not be achieved include, but are not limited to, risks and uncertainties relating to the respective businesses of NortonLifeLock and Avast (including their respective abilities to achieve strategic goals, objectives and targets over applicable periods), industry performance, the impact of the COVID-19 pandemic, the regulatory and competitive environment and changes in technology, general business and economic conditions. Various assumptions underlying the Consensus Financial Projections may not prove to have been, or may no longer be, accurate. The Consensus Financial Projections may not be realized, and actual results may be significantly higher or lower than projected in the Consensus Financial Projections. The Consensus Financial Projections summarized below do not give effect to the Merger. The Consensus Financial Projections were based on consensus financial forecasts that were publicly available as of August 6, 2021, and extrapolations thereof (which were prepared prior to the date of the Merger Agreement) and,
 
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as a result, do not take into account any circumstances or events occurring after the date they were prepared, including the Merger. The Consensus Financial Projections were selected at a particular time and were utilized for the various financial analyses prepared over the course of evaluating the Merger — thus, NortonLifeLock has not updated, nor does NortonLifeLock intend to update or otherwise revise, the Consensus Financial Projections. There can be no assurance that the results reflected in the Consensus Financial Projections will be realized or that actual results will not materially vary from the Consensus Financial Projections. In addition, the Consensus Financial Projections cover multiple years and such information by its nature becomes less predictive with each successive year. Therefore, the inclusion of the Consensus Financial Projections in this proxy statement should not be relied on as necessarily predictive of actual future events nor construed as financial guidance.
The Consensus Financial Projections and Estimated Synergies (as defined below) were not required to be and were not prepared in compliance with published guidelines established by the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts, U.S. GAAP, IFRS (EU) or IFRS (IASB), nor were they prepared with the intention of being relied upon by stockholders of NortonLifeLock or shareholders of Avast, including for purposes of Rule 28 of the Takeover Code.
No independent registered accounting firm has examined, compiled or otherwise performed any procedures with respect to the Consensus Financial Projections and, accordingly, no independent registered accounting firm has expressed any opinion or given any other form of assurance with respect thereto and no independent registered accounting firm assumes any responsibility for the Consensus Financial Projections. The reports of NortonLifeLock’s independent registered public accounting firm incorporated by reference into this proxy statement relate to NortonLifeLock’s historical financial information and do not extend to the Consensus Financial Projections and should not be read to do so. Certain of the financial projections set forth herein may be considered non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used in the Consensus Financial Projections may not be comparable to similarly titled amounts used by other companies or persons.
This summary of the Consensus Financial Projections is not being included in this proxy statement to influence your decision whether to vote in favor of any proposal. None of NortonLifeLock, Avast or their respective affiliates, advisors, officers, directors, partners or representatives can give you any assurance that actual results will not differ from the Consensus Financial Projections, and none of them undertake any obligation to update or otherwise revise or reconcile the Consensus Financial Projections to reflect circumstances existing after the date the Consensus Financial Projections were generated or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the Consensus Financial Projections are shown to be in error, in each case, except as may be required under applicable law. In addition, none of NortonLifeLock, Avast or their respective affiliates, advisors, officers, directors, partners or representatives has made, makes or is authorized in the future to make any representation to any stockholder or other person regarding NortonLifeLock’s, Avast’s or the Combined Company’s ultimate performance compared to the information contained in the Consensus Financial Projections will be achieved, and any statements to the contrary should be disregarded. Neither NortonLifeLock nor its financial advisor assumes any responsibility for the validity, reasonableness, accuracy or completeness of the Consensus Financial Projections.
In light of the foregoing, and considering that NortonLifeLock’s special meeting will be held several months after the Consensus Financial Projections and Estimated Synergies were prepared, as well as the uncertainties inherent in any forecasted information, NortonLifeLock stockholders are cautioned not to place unwarranted reliance on such information, and all NortonLifeLock stockholders are urged to review NortonLifeLock’s most recent SEC filings for a description of NortonLifeLock’s reported financial results. See “Where You Can find More Information” beginning on page 123.
NortonLifeLock Consensus Financial Projections
The following financial projections with respect to NortonLifeLock represent (unless otherwise stated below) the average of twelve research analysts’ available estimates (consensus forecast) for the fiscal
 
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year ending April 1, 2022 to the fiscal year ending March 29, 2024, and as extrapolated for the fiscal year ending March 28, 2025 to the fiscal year ending April 2, 2027, in each case for the operating measures identified below. NortonLifeLock’s management directed Evercore to use such Consensus Financial Projections in connection with the financial analysis Evercore performed and Evercore’s opinion and such Consensus Financial Projections were approved by NortonLifeLock’s management for use by Evercore in connection with the financial analysis Evercore prepared and Evercore’s opinion summarized in the section entitled “Opinion of Evercore — Financial Advisor to NortonLifeLock”.
Consensus Forecast
Extrapolations
2022
2023
2024
2025
2026
2027
Fiscal Year ending ~March 31(1)
Revenue
$ 2,796 $ 2,974 $ 3,159 $ 3,332 $ 3,490 $ 3,629
Adjusted EBITDA(2)
$ 1,474 $ 1,542 $ 1,622 $ 1,699 $ 1,780 $ 1,851
Adjusted Net Income(3)
$ 987 $ 1,090 $ 1,218 $ 1,227 $ 1,286 $ 1,337
Adjusted Unlevered Free Cash Flow(4)
$ 1,133 $ 1,125 $ 1,152 $ 1,205 $ 1,263 $ 1,316
(1)
All dollar amounts in millions. NortonLifeLock’s fiscal year ends are: April 1, 2022, March 31, 2023, March 29, 2024, March 28, 2025, April 3, 2026 and April 2, 2027
(2)
Adjusted EBITDA is calculated as net income before interest, income taxes, depreciation and amortization, adjusted to exclude stock-based compensation expense, loss (gain) on discontinued operations, loss (gain) on extinguishment of debt, fair value adjustment for contract liabilities, restructuring charges, acquisition-related costs, litigation settlement charges, loss (gain) on sale of properties, other non-operating expense (income) and other charges
(3)
Adjusted Net Income is calculated as net income adjusted to exclude stock-based compensation expense, fair value adjustment for contract liabilities, amortization of intangible assets, restructuring charges, acquisition-related costs, litigation settlement charges, non-cash interest expense, loss (gain) or divestitures and sale of equity method investments, loss (gain) on extinguishment of debt, loss (gain) on sale of properties, adjustment to provision for income taxes and income from discontinued operations (net)
(4)
Adjusted Unlevered Free Cash Flow is calculated as Adjusted EBITDA, less (using, for the fiscal years 2022 to 2024, the metrics derived from one or more available consensus research analysts estimates for each of the following component items and extrapolations thereof for fiscal years 2025 to 2027) stock-based compensation expense, taxes (incorporating the effect of the tax shield from D&A expenses) and capital expenditures, and adjusted for changes in net working capital
Adjusted EBITDA, Adjusted Net Income and Adjusted Unlevered Free Cash Flow as presented above in NortonLifeLock Consensus Financial Projections are non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used in the NortonLifeLock Consensus Financial Projections may not be comparable to similarly titled amounts used by other companies or persons.
Avast Consensus Financial Projections
The following financial projections with respect to Avast represent (unless otherwise stated below) the average of twelve research analysts’ available estimates (consensus forecast) for the fiscal year ending December 31, 2021 to the fiscal year ending December 31, 2023, and as extrapolated for the fiscal year ending December 31, 2024 to the fiscal year ending December 31, 2026, in each case for the operating measures identified below. NortonLifeLock’s management directed Evercore to use such Consensus Financial Projections in connection with the financial analysis Evercore performed and Evercore’s opinion and such amounts were approved by NortonLifeLock’s management for use by Evercore in connection with the financial analysis Evercore prepared and Evercore’s opinion summarized in the section entitled “Opinion of Evercore — Financial Advisor to NortonLifeLock”.
 
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Consensus Forecast
Extrapolations
2021
2022
2023
2024
2025
2026
Fiscal Year ending December 31(1)(2)
Revenue
$ 944 $ 1,008 $ 1,082 $ 1,150 $ 1,211 $ 1,262
Adjusted EBITDA(3)
$ 528 $ 565 $ 612 $ 646 $ 680 $ 709
Adjusted Net Income(4)
$ 383 $ 414 $ 450 $ 472 $ 497 $ 518
Adjusted Unlevered Free Cash Flow(5)
$ 365 $ 392 $ 433 $ 456 $ 481 $ 503
(1)
All dollar amounts in millions
(2)
Avast reports on an IFRS basis
(3)
Adjusted EBITDA is calculated as operating profit/loss before depreciation, amortization of non-acquisition intangible assets, share-based payments including related employer’s costs, exceptional items and amortization of acquisition intangible assets
(4)
Adjusted Net Income is calculated as statutory net income (profit after tax) plus share-based payments, exceptional items, amortization of acquisition intangible assets, unrealized foreign exchange gain/loss on the EUR tranche of the bank loan, the tax impact from the unrealized exchange differences on intercompany loans, and the tax impact of the foregoing adjusting items and IP transfer, less gain on disposal of business operation
(5)
Adjusted Unlevered Free Cash Flow is calculated as Adjusted EBITDA, less (using, for the fiscal years 2021 to 2023, the metrics derived from one or more available consensus research analysts estimates for each of the following component items and extrapolations thereof for fiscal years 2024 to 2026) stock-based compensation expense, taxes (incorporating the effect of the tax shield from D&A expenses) and capital expenditures, and adjusted for changes in net working capital
Adjusted EBITDA, Adjusted Net Income and Adjusted Unlevered Free Cash Flow as presented above in Avast Consensus Financial Projections are non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used in the Avast Consensus Financial Projections may not be comparable to similarly titled amounts used by other companies or persons.
Estimated Synergies
NortonLifeLock’s management also estimated certain synergies that were expected to result from the Merger and be realized by the combined company, which we refer to in this proxy statement as the “Estimated Synergies.” NortonLifeLock’s management provided the Estimated Synergies to (i) the NortonLifeLock Board in connection with its review and evaluation of the proposed Merger and (ii) Evercore and NortonLifeLock’s management approved the Estimated Synergies for use by Evercore for the purpose of performing financial analysis in connection with Evercore’s fairness opinion as described in this proxy statement under “Opinion of Evercore — Financial Advisor to NortonLifeLock” beginning on page 47. NortonLifeLock anticipates that the Merger will result in recurring annual pre-tax gross cost synergies for the Combined Company to reach a run-rate of approximately $280 million. This represents between approximately 15% and 20% of combined adjusted cost of sales and operating spend, based on the latest full year reported results for each of NortonLifeLock and Avast. NortonLifeLock expects to realize approximately 60% of the run-rate cost savings by the end of the first full year following completion of the Merger and 100% by the end of the second full year following completion of the Merger, excluding any potential synergy reinvestment and associated benefits. No such synergy benefits were factored into the Financial Projections.
The Estimated Synergies will accrue as a direct result of the Merger and would not be achieved on a standalone basis. Aside from integration costs, no material dis-benefits are expected to arise in connection with the Merger. See the section above titled “Cautionary Note Regarding Forward-Looking Statements” beginning on page 17 for further information regarding the uncertainties and assumptions underlying
 
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the Estimated Synergies, as well as the section entitled “Risk Factors — NortonLifeLock may fail to realize the anticipated benefits and operating synergies expected from the Merger, which could adversely affect its business, financial condition and operating results” beginning on page 18 for further information regarding the uncertainties and factors associated with realizing the Estimated Synergies in connection with the Merger.
The paragraphs above relating to Estimated Synergies constitute a “Quantified Financial Benefits Statement” for the purposes of Rule 28 of the Code. Annex D sets out further details on the Quantified Financial Benefits Statement, including the bases of belief and principal assumptions, and the reports required under the Code by Deloitte, NortonLifeLock’s reporting accountants, and by Evercore, acting as financial adviser to NortonLifeLock. References in this proxy to the Quantified Financial Benefits Statement should be read in conjunction with Annex D.
The Rule 2.7 Announcement and the Scheme of Arrangement
Subject to the satisfaction or waiver, as applicable, of the conditions to the Merger, the Merger will be implemented by means of a Court-sanctioned scheme of arrangement between Avast and Avast shareholders under the UK Companies Act. The purpose of the Scheme is to provide for Bidco to acquire the entire issued and to be issued ordinary share capital of Avast.
Under the Scheme, the Merger is to be achieved by:

the acquisition by Bidco of all issued and to be issued Avast Shares from the Avast shareholders in consideration for which Avast shareholders will receive consideration on the basis set out in the Rule 2.7 Announcement and described in further detail in the Scheme Document; and

amendments to Avast’s articles of association to ensure that any Avast Shares issued after the Scheme record time to any person other than Bidco and/or its nominee will automatically be transferred to Bidco (and/or its nominee) on the same terms and for the same consideration as would have been received had such Avast Shares been transferred to Bidco as part of the Merger (other than as to timing and certain formalities).
Upon the Scheme becoming effective, it will be binding on all Avast shareholders (irrespective of whether or not they attended or voted at the Court Meeting and the General Meeting (and, if they attended and voted, whether or not they voted in favor)), and share certificates in respect of Avast Shares will cease to be of value and should be destroyed and entitlements to Avast Shares held within the CREST system will be cancelled. After the Avast Shares are delisted from the London Stock Exchange, Bidco intends to re-register Avast as a private limited company.
The Scheme is governed by the laws of England and Wales and is subject to the exclusive jurisdiction of the English courts. The rules of the UK Takeover Code also apply to the Scheme.
Conditions to the Merger
The Merger will become effective only if, among other things, the following events occur on or before the Long Stop Date:

the FCA having approved the UK Prospectus and it having been made available to the public in accordance with the UK Prospectus Regulation Rules;

the approval of the Scheme by a majority in number of Avast shareholders present (in person or by proxy) and voting at the Court Meeting to consider and vote on the Scheme, which majority represents at least 75% in value of the Avast Shares held by such Avast shareholders;

each of (a) the Court Meeting, (b) the General Meeting, and (c) the hearing of the Court seeking an order sanctioning the Scheme (the “Court Hearing”), being held on or before the 22nd day after the expected date for each such meeting or hearing, respectively, as set out in the Scheme Document or, in any such case, such later dates as Bidco and Avast may agree and the Court may allow;
 
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the passing of all resolutions necessary to approve and implement the Scheme by the requisite majority or majorities at the General Meeting;

the sanction of the Scheme by the Court with or without modification (but subject to any such modification being acceptable to Bidco and Avast);

the delivery of a copy of the order of the Court sanctioning the Scheme to the Registrar of Companies in England and Wales;

the Share Issuance Proposal being duly approved by NortonLifeLock’s shareholders;

the approval of the New NortonLifeLock Shares issued pursuant to the Share Issuance Proposal for listing on Nasdaq, subject to official notice of issuance;

the receipt or waiver, on terms satisfactory to Bidco, of any applicable antitrust approvals, clearances, or expiration or termination of waiting periods in the United States, the United Kingdom, Germany and Spain (and/or, upon referral, approval from the European Commission), Australia and New Zealand;

a written notification from CFIUS that it has completed action under Section 721 of the DPA or, if CFIUS has sent a report to the President of the United States, either (a) the President has not taken any action after fifteen days from the earlier of the date the President having received such report from CFIUS or the end of the investigation period, or (b) the President of the United States has announced a decision not to take any action to suspend or prohibit the Merger; and

the receipt or waiver of applicable foreign investment approvals in Germany, the Czech Republic, Romania and, if in force and applicable, any such approvals required in the United Kingdom and the Netherlands.
The Scheme will lapse if it does not become effective by the Long Stop Date.
However, in certain circumstances, Bidco and NortonLifeLock may not be able to invoke the conditions to the Merger in order to terminate the Merger. The UK Takeover Code provides that certain conditions may only be invoked where the circumstances underlying the failure of the condition are of material significance to NortonLifeLock in the context of the Merger. Therefore, with the exception of certain conditions relating to: (1) the approval of the Scheme by Avast shareholders and the Court; (2) the sanction of the Scheme by the Court; (3) the approval of the issuance of the New NortonLifeLock Shares by the shareholders of NortonLifeLock; and/or (4) the listing of the New NortonLifeLock Shares on Nasdaq, NortonLifeLock may be required to obtain the agreement of the Panel that the circumstances giving rise to the right to invoke a condition were of material significance to NortonLifeLock in the context of the Merger.
The Co-operation Agreement
On August 10, 2021, in connection with the Merger, NortonLifeLock, Bidco and Avast entered into the Co-operation Agreement pursuant to which, among other undertakings, Avast, Bidco and NortonLifeLock agreed to use all reasonable endeavors to take all appropriate action and do, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective as soon as reasonably practicable, and in any event prior to the Long Stop Date, the transactions contemplated by the Co-operation Agreement.
Regulatory Undertakings
The parties have agreed to certain undertakings to co-operate and provide one another with reasonable information, assistance and access in relation to the filings, submissions and notifications to be made in relation to the regulatory clearances and authorizations necessary to satisfy the Regulatory Conditions. Taking due account of its legal obligations with respect to the regulatory clearances and authorizations, as well as the views and comments of Avast, NortonLifeLock will have the right to determine the strategy for obtaining the regulatory clearances and authorizations, and for satisfying the Regulatory Conditions.
 
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NortonLifeLock and Bidco will use all reasonable endeavors to obtain the regulatory approvals which are required to implement the Merger in substantially the form contemplated by the Rule 2.7 Announcement. For such purpose, all reasonable endeavors shall require NortonLifeLock and Bidco to take, or agree to take, all actions necessary to secure the regulatory clearances and authorizations necessary to satisfy the Regulatory Conditions required to implement the Merger in substantially the form contemplated by the Rule 2.7 Announcement (including accepting any relevant remedies or required disposals), in each case except to the extent that such actions would, individually or in the aggregate, be of material significance to NortonLifeLock and Bidco in the context of the Merger (as such material significance standard is or would fall to be determined by the Panel under the UK Takeover Code), in which case NortonLifeLock and Bidco shall not be required to take, or agree to take, such actions.
Undertakings Concerning Stockholder Approval, the Scheme Document and the UK Prospectus
Under the Co-operation Agreement, NortonLifeLock has also agreed to certain procedural and other commitments with respect to the preparation of this proxy statement (including undertaking to use its best endeavors to resolve any comments received from the SEC concerning this proxy statement as promptly as reasonably practicable), the convening of the NortonLifeLock special meeting, the preparation of the UK Prospectus, and assisting with the provision of information for any documents relating to the Merger to be prepared by Avast after the date of the Rule 2.7 Announcement, including the Scheme Document. Avast has agreed to certain procedural and other commitments with respect to the preparation of the Scheme Document (and associated documents) and assisting with the provision of information for documents relating to the Merger to be prepared by NortonLifeLock after the date of the Rule 2.7 Announcement, including this proxy statement.
Termination of the Co-operation Agreement
The Co-operation Agreement will terminate in certain circumstances including, among other things:

if agreed in writing among NortonLifeLock, Bidco and Avast prior to the Effective Date;

upon service of written notice by NortonLifeLock to Avast, or Avast to NortonLifeLock and Bidco if:

an Avast Board Recommendation Change occurs;

a Break Payment Event (as defined below) occurs;

Bidco and/or NortonLifeLock invokes (and is permitted by the Panel to invoke) a condition to the Merger (other than a Regulatory Condition or under other limited specified circumstances) so as to cause the Merger to lapse, to be withdrawn or not to proceed; or

unless otherwise agreed in writing by the parties, the Effective Date has not occurred on or prior to the Long Stop Date;

the Share Issuance Proposal is not approved by the requisite majority of NortonLifeLock’s shareholders at the NortonLifeLock special meeting;

prior to the Long Stop Date, a third party announces a firm intention to make an offer or revised offer for Avast which completes, becomes effective or is declared unconditional in all respects;

the Avast shareholders do not approve the Scheme at the Court Meeting and/or the relevant resolutions relating to the Scheme are not approved by the requisite majority of Avast shareholders at the General Meeting, other than in circumstances where NortonLifeLock has elected to implement the Merger by means of a Takeover Offer pursuant to an Agreed Switch;

the Scheme is not sanctioned at the Court Hearing;

upon service of written notice by Avast to NortonLifeLock if NortonLifeLock makes an announcement before the publication of this proxy statement that (a) it will not convene the NortonLifeLock special meeting, or (b) it does not intend to post this proxy statement or to convene the special meeting;
 
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on the earliest to occur of (a) the Scheme lapsing, terminating or being withdrawn (unless NortonLifeLock has elected to implement the Merger by way of a Takeover Offer pursuant to an Agreed Switch before such lapse, termination or withdrawal) and (b) the Effective Date; and

in the event of an Agreed Switch, the earliest to occur of (a) the date on which that Takeover Offer lapses, terminates or is withdrawn and (b) the Effective Date.
Break Payments
The Co-operation Agreement also provides that, subject to certain exceptions (described below):
(a)
if either (i) a NortonLifeLock Board Recommendation Change has occurred or (ii) the special meeting has not occurred prior to the Long Stop Date in breach of NortonLifeLock’s obligations under the Co-operation Agreement, NortonLifeLock will pay Avast a fee of $300,000,000;
(b)
if either (i) Bidco and/or NortonLifeLock invokes (and is permitted by the Panel to invoke) any Regulatory Condition so as to cause the Merger to lapse, to be withdrawn, or not to proceed or (ii) a Regulatory Condition has not been satisfied or waived by Bidco and/or NortonLifeLock as at the Long Stop Date (each a “Regulatory Condition Satisfaction Failure Event”), NortonLifeLock will pay Avast a fee of $200,000,000; or
(c)
if NortonLifeLock stockholders do not approve the Share Issuance Proposal at the special meeting and there has been no NortonLifeLock Board Recommendation Change, NortonLifeLock will pay Avast a fee of $100,000,000.
Each of the foregoing events described in clauses (a), (b) and (c) is referred to herein as a “Break Payment Event” and the fee payable by NortonLifeLock in connection with a Break Payment Event is referred to herein as a “Break Payment”.
No Break Payment would be payable by NortonLifeLock if: (i) prior to the time a Break Payment Event occurs an Avast Board Recommendation Change has occurred; (ii) prior to the time a Break Payment Event occurs, the Co-operation Agreement has been terminated pursuant to the occurrence of one or more of the following events: (A) if Bidco and/or NortonLifeLock invokes (and is permitted by the Panel to invoke) a condition to the Merger (other than a Regulatory Condition or in respect of the requisite approval of the NortonLifeLock stockholders not having being obtained at the special meeting) so as to cause the Merger to lapse, to be withdrawn, or not to proceed (a “Non-Fee Termination Event”); (B) if, prior to the Long Stop Date, a third party announces a firm intention to make an offer or revised offer for Avast which completes, becomes effective or is declared or becomes unconditional in all respects; (C) if the Scheme is not approved by the requisite majority or majorities of Avast shareholders at the Court Meeting and the General Meeting, other than in circumstances where NortonLifeLock has elected, pursuant to an Agreed Switch, to implement the Merger by means of a Takeover Offer (an “Approval Failure Termination Event”); (D) if the Scheme is not sanctioned at the Court Hearing, except in circumstances where Bidco, in each case with the Panel’s permission, does not intend to invoke or has not invoked a condition of the Merger, and the non-sanction of the Scheme has occurred as a result of Bidco failing to deliver to Avast a notice confirming the satisfaction or waiver of all conditions to the Merger (other than conditions capable of being satisfied only upon or following the sanction of the Scheme by the Court) before the Court Hearing (a “Court Sanction Hearing Termination Event”); or (E) the date on which the Scheme (or the Takeover Offer, if NortonLifeLock has elected to implement the Merger by way of a Takeover Offer pursuant to an Agreed Switch) lapses, terminates or is withdrawn, except where such termination arises as a result of a Break Payment Event (and not as a result of any other condition to the Merger that does not give rise to a Break Payment Event) (an “Lapse Termination Event”); (iii) an automatic termination right or a right to terminate the Co-operation Agreement has arisen, in each case, on the Long Stop Date in the case of a Break Payment Event that is triggered on the Long Stop Date pursuant to: (A) a Non-Fee Termination Event; (B) if the Effective Date has not occurred on or prior to the Long Stop Date (unless such termination applies due to an event which would trigger a Break Payment for a Regulatory Condition Satisfaction Failure Event or a NortonLifeLock Board Recommendation Change); (C) an Approval Failure Termination Event; (D) a Court Sanction Hearing Termination Event or (E) a Lapse Termination Event; or (iv) in the case of the Break Payment
 
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Event described in clause (b) above, such Break Payment Event occurred in circumstances where Avast has materially obstructed NortonLifeLock and Bidco from being able to obtain a regulatory clearance or authorization (and such action(s) or non-action(s) are a material and contributory cause of such failure to obtain such clearance or authorization), or Avast has undertaken, agreed to or announced an acquisition, licensing arrangement or other arrangement or collaboration with a third party and such action was a material contributory cause of the Regulatory Condition Satisfaction Failure Event.
In the event that a Break Payment is due and payable, except with respect to fraud, Avast’s right to receive such Break Payment shall be the Avast Group’s sole and exclusive remedy against NortonLifeLock, any member of the NortonLifeLock Group, Bidco and any of their respective affiliates for any and all losses and damages suffered in connection with the Co-operation Agreement and the transactions contemplated thereby. In no event shall NortonLifeLock be required to pay a Break Payment more than once.
Change in Merger Structure
The Co-operation Agreement records NortonLifeLock’s, Bidco’s and Avast’s intentions to implement the Merger by way of the Scheme, subject to the ability of Bidco to implement the Merger by way of a Takeover Offer in certain circumstances.
Subject to obtaining the consent of the Panel, Bidco reserves the right to elect to implement the Merger by way of a Takeover Offer as an alternative to the Scheme.
Additionally, under the Rule 2.7 Announcement, any such Takeover Offer will be implemented on substantially the same terms and conditions, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments to reflect the change in method of effecting the Merger. Further, if sufficient acceptances of the Takeover Offer are received and/or sufficient Avast Shares are otherwise acquired, it is the intention of Bidco to apply the provisions of the UK Companies Act to compulsorily acquire any outstanding Avast Shares to which such Takeover Offer relates.
Interim Operations
Pending completion of the Merger, NortonLifeLock agreed to certain restrictions on its business. Subject to certain exceptions, prior to the Effective Date, NortonLifeLock will not, among other things: (1) split, combine, consolidate, sub-divide, reclassify, redeem, cancel or repurchase any NortonLifeLock Shares or other equity interests of NortonLifeLock other than in specified circumstances, including in connection with equity awards and NortonLifeLock’s convertible notes; (2) other than NortonLifeLock’s agreed quarterly dividend of 12.5 cents per NortonLifeLock Share and dividends payable on its convertible notes, authorize, declare or pay any other dividend or distribution in cash or otherwise with respect to its shares, except dividends or distributions with a Record Date after the Effective Date, so that, after the Merger is completed, the New NortonLifeLock Shares will rank pari passu with all other NortonLifeLock Shares with respect to participation in such dividend or other distribution; (3) amend its organizational documents in any manner likely to have a material adverse effect for Avast shareholders who are due to receive New NortonLifeLock Shares pursuant to the Merger; (4) solely with respect to NortonLifeLock, adopt a plan of complete or partial liquidation or dissolution; (5) sell, lease, license, transfer or otherwise dispose of, or subject to any lien, any of its material assets, subject to certain exceptions including transactions with third parties on a bona fide arm’s length basis; (6) delist the NortonLifeLock Shares from Nasdaq; or (7) agree, resolve, commit or announce its intention to do any of the foregoing (as applicable), whether conditionally or unconditionally.
No Solicitation of Alternative Proposals
NortonLifeLock has agreed that it will, and will cause any member of the NortonLifeLock Group and its and their respective affiliates and representatives to, immediately cease, and cause to be terminated, all existing discussions or negotiations conducted before the date of the Co-operation Agreement, with respect to any proposal or offer from any person or group relating to any: (i) direct or indirect acquisition, purchase, lease, exchange, transfer or license, in a single transaction or a series of related transactions,
 
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including by means of the acquisition of capital stock of any member of the NortonLifeLock Group, of assets or properties that constitute 20% or more of the assets and properties (based on fair market value) of the NortonLifeLock Group, taken as a whole; (ii) the direct or indirect acquisition or purchase, in a single transaction or a series of related transactions, of beneficial ownership, or the right to acquire beneficial ownership, of 20% or more of the voting power of all outstanding equity securities of NortonLifeLock; or (iii) the issuance or sale or other disposition (including by way of merger, consolidation, share exchange, business combination, reorganisation, recapitalisation or other similar transaction) in a single transaction or a series of related transactions of 20% or more of the voting power of all outstanding equity securities of NortonLifeLock, in each case, other than the Merger (an “Alternative Proposal”) or any enquiry or proposal that may reasonably be expected to lead to an Alternative Proposal.
NortonLifeLock has agreed, between the date of the Co-operation Agreement and until the earlier of the termination of the Co-operation Agreement and the Effective Date, that it will not, and will use all reasonable endeavors to cause the members of the NortonLifeLock Group and its and their respective affiliates and representatives not to, enter into, continue or participate in any discussions or negotiations regarding, or furnish any information with respect to, or otherwise cooperate in any way that could otherwise be reasonably expected to lead to, an Alternative Proposal.
If, at any time after the execution of the Co-operation Agreement and prior to the approval of the Share Issuance Proposal by the NortonLifeLock stockholders at the special meeting, any member of the NortonLifeLock Group or any of their respective representatives receives a bona fide, unsolicited Alternative Proposal (which did not result from a breach by NortonLifeLock or any member of the NortonLifeLock Group of the non-solicitation provisions set forth in the Co-operation Agreement) and the NortonLifeLock board of directors concludes in good faith (after consultation with its outside counsel and financial advisors) that such Alternative Proposal constitutes, or would reasonably be expected to lead to, bona fide written proposal to enter into an Alternative Proposal, with all references to 20% in the definition of Alternative Proposal being treated as references to 50% for these purposes, that: (i) is on terms that the NortonLifeLock board of directors determines in good faith (after consultation with its outside financial advisors and outside legal counsel) to be more favorable from a financial point of view to NortonLifeLock’s stockholders than the Merger, taking into account all relevant factors; and (ii) is reasonably likely to be capable of being completed in accordance with its terms, taking into account all financial, regulatory, legal and other aspects of such proposal (a “Takeover Proposal”), and that the failure to take such action would reasonably be expected to be inconsistent with the NortonLifeLock board of directors’ fiduciary duties under applicable law (a “Qualifying Takeover Proposal”), NortonLifeLock may (A) enter into a confidentiality agreement with such person making the Qualifying Takeover Proposal, and furnish, or cause to be furnished, information (including non-public information) with respect to the NortonLifeLock Group so long as, prior to or substantially concurrently with the time that such information is provided to the person making the Qualifying Takeover Proposal, NortonLifeLock also provides Avast with any such information that was not previously furnished to Avast and (B) engage in or otherwise participate in discussions or negotiations with such person and its representatives regarding such Qualifying Takeover Proposal.
NortonLifeLock agreed to promptly (and, in any event, within 48 hours after receipt) (i) notify Avast, orally and in writing following its receipt of any Alternative Proposal by the NortonLifeLock Group (including the material terms and conditions thereof and the identity of the person making such Alternative Proposal) and will include with such notice unredacted copies of any written materials received from or on behalf of such person making the Alternative Proposal and (ii) keep Avast informed of any material oral or written communications and material developments with respect to the status and terms of any Alternative Proposal and shall provide Avast with unredacted copies of all related written materials.
Change in Board Recommendation
Under the Co-operation Agreement, subject to certain exceptions described below, NortonLifeLock agreed that the NortonLifeLock board of directors will make a unanimous recommendation to the NortonLifeLock stockholders to vote in favor of the Share Issuance Proposal (the “NortonLifeLock Board Recommendation”) and has agreed to use all reasonable endeavors to obtain the requisite approval by NortonLifeLock stockholders of the Share Issuance Proposal at the special meeting.
 
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However, under certain circumstances described below, the board of directors of NortonLifeLock may take any of the following actions (each a “NortonLifeLock Board Recommendation Change”):

withdraw, withhold or qualify (or amend or modify in any manner adverse to Avast) or propose publicly to withdraw, withhold or qualify (or amend or modify in any manner adverse to Avast), the NortonLifeLock Board Recommendation;

fail to include the NortonLifeLock Board Recommendation in this proxy statement; or

approve, recommend, adopt or propose publicly to approve, recommend or adopt, any Alternative Proposal or Takeover Proposal.
At any time prior to the receipt of the requisite approval of the Share Issuance Proposal by the NortonLifeLock stockholders, the NortonLifeLock board of directors may make or announce a NortonLifeLock Board Recommendation Change, solely in response to either: (a) a bona fide, unsolicited Alternative Proposal that been made and not withdrawn or (b) an Intervening Event (as defined below) that is continuing, if: (i) the NortonLifeLock board of directors determines in good faith (after consultation with its financial advisors and outside legal counsel) that such Alternative Proposal constitutes a Takeover Proposal; and (ii) with respect to such Alternative Proposal or an Intervening Event the NortonLifeLock board of directors determines in good faith (after consultation with its outside legal counsel), that failure to make a NortonLifeLock Board Recommendation Change would reasonably be expected to be inconsistent with the board’s fiduciary duties under applicable law. However, the NortonLifeLock board of directors may not effect such a NortonLifeLock Board Recommendation Change unless:

NortonLifeLock gives Avast at least five business days’ prior written notice of its intention to take such action;

NortonLifeLock negotiates in good faith with Avast during such notice period, if and to the extent Avast wishes to negotiate, to enable Avast to propose and/or the parties to agree to revisions to the terms of the Co-operation Agreement and (subject to any obligations of the respective parties under law and any requirement, consent or direction of the Panel or other regulatory authority (as defined under the Co-operation Agreement)) to the terms of the Merger; and

at the end of such notice period, the NortonLifeLock board of directors considers in good faith any revised terms proposed by Avast and after consultation with its financial advisors and outside legal counsel, determines that (i) with respect to an Alternative Proposal, the Alternative Proposal continues to constitute a Takeover Proposal and (ii) in the case of an Alternative Proposal or an Intervening Event, that the failure to make a NortonLifeLock Board Recommendation Change would reasonably be expected to be inconsistent with its fiduciary duties under applicable law.
Any amendment to the financial terms or any other material terms of a Takeover Proposal to which such notice period relates will require a new notice period, except that two business days’ prior written notice must be given, instead of five business days as described above.
In this proxy statement, an “Intervening Event” means any effect, change, event, fact, condition, development or occurrence that is material to the NortonLifeLock Group, taken as a whole, that: (i) first becomes known after the date of the Co-operation Agreement and prior to receipt of the requisite approval of the Share Issuance Proposal by the NortonLifeLock stockholders; and (ii) was not known by or reasonably foreseeable to the NortonLifeLock board of directors as of the date of the Co-operation Agreement; provided, however, that in no event shall any of the following effects, changes, events, facts, conditions, developments or occurrences be taken into account in determining whether an Intervening Event has occurred: (A) the receipt, existence or terms of an Alternative Proposal, or an inquiry, proposal or offer that could reasonably be expected to lead to an Alternative Proposal, or any matter relating thereto or direct or indirect consequence thereof; or (B) the fact that, in and of itself, any member of the NortonLifeLock Group exceeds any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics, or changes or prospective changes in the market price or trading volume of the NortonLifeLock Shares (it
 
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being understood that the underlying facts giving rise or contributing to such events may be taken into account in determining whether there has been an Intervening Event if such facts are not otherwise excluded under this definition).
Share Schemes
The Co-operation Agreement also contains provisions that will apply in respect of certain of Avast’s employee equity plans. As at the date of the Co-operation Agreement, there were outstanding options and awards under the Avast Long Term Incentive Plan (the “LTIP”), the Avast Share Matching Plan (the “SMP”), and the Avast Holding BV 2014 Share Option Plan (the “SOP” and collectively, the “Avast Share Schemes”) over in aggregate 21,323,554 Avast Shares.
The Merger will affect participants in the Avast Share Schemes. NortonLifeLock and Avast have agreed that NortonLifeLock will make appropriate proposals to the holders of options and awards under the Avast Share Schemes in accordance with Rule 15 of the UK Takeover Code. Further details of these arrangements will be communicated to participants in the Avast Share Schemes in due course. Awards and options which vest and are exercised prior to the record time of the Scheme will be satisfied by the allotment, issue or transfer of Avast Shares prior to the record time of the Scheme and those Avast Shares will be subject to the Scheme.
Parent Company Guarantee
NortonLifeLock has provided a parent company guarantee in respect of Bidco’s obligations under the Co-operation Agreement on certain terms and conditions set forth in the Co-operation Agreement (the “Guarantee”). The Guarantee shall remain in full force and effect until the obligations of Bidco under the Co-operation Agreement have been fulfilled or shall have expired in accordance with the terms of the Co-operation Agreement, or the Co-operation Agreement has been terminated (without prejudice to the rights of any party that may have arisen prior to termination (including the payment of any Break Payment thereunder)).
Corporate Governance
Following completion of the Merger, it is intended that Avast’s Chief Executive Officer, Ondrej Vlcek, will join NortonLifeLock as President and become a member of the NortonLifeLock board of directors. In addition, Pavel Baudiš, a co-founder of Avast and current member of the Avast board of directors, is expected to join the NortonLifeLock board of directors as an independent director.
It is intended that, upon completion of the Merger, each of the non-executive members of the Avast board of directors will resign as directors of Avast.
Following completion of the Merger, it is also intended that Vincent Pilette, the Chief Executive Officer of NortonLifeLock, will be the Chief Executive Officer of the Combined Company, and Natalie Derse, the Chief Financial Officer of NortonLifeLock, will be the Chief Financial Officer of the Combined Company.
Financing
The following is a summary of selected provisions of the Commitment Letter and the Interim Facilities Agreement. While we believe this description covers the material terms of the Commitment Letter and the Interim Facilities Agreement, it may not contain all of the information that is important to you and is qualified in its entirety by reference to the initial Interim Facilities Agreement and the initial Commitment Letter which were attached as exhibits 10.01 and 10.02 the Current Report on Form 8-K of NortonLifeLock filed with the U.S. Securities and Exchange Commission on August 10, 2021, and is incorporated by reference into this proxy statement. See the section entitled “Where You Can Find More Information” beginning on page 123. We urge you to read each of the Interim Facilities Agreement and the Commitment Letter carefully and in its entirety.
NortonLifeLock and certain financial institutions entered into the Interim Facilities Agreement, pursuant to which Bank of America and Wells Fargo Bank N.A., as interim lenders, agreed to provide NortonLifeLock with (i) a $3,600 million term loan interim facility B, (ii) a $750 million term loan interim
 
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facility A1 (“Interim Facility A1”) and $3,500 million term loan interim facility A2 and (iii) a $1,500 million interim revolving facility (collectively, the “Interim Facilities”), and the Commitment Letter, pursuant to which certain financial institution parties agreed to provide to NortonLifeLock, subject to the execution of definitive financing documents, certain term loan and revolving facilities on the terms and conditions set forth in the Commitment Letter (collectively, the “Facilities”) in order to, among other things, finance the cash consideration payable by NortonLifeLock in connection with the Merger.
Any Interim Facilities made available to NortonLifeLock pursuant to the Interim Facilities Agreement will, on or before the Final Repayment Date (as defined in the Interim Facilities Agreement), be repaid/replaced in full by the loans made under the definitive financing documentation for the Facilities. The availability of the borrowings under the Facilities (or, in the event that the commitments under the Facilities are not funded on the closing date of the Merger, the Interim Facilities Agreement) are subject to the satisfaction of certain customary conditions for financings of this nature.
The Interim Facilities Agreement contains, and any definitive financing documentation for the Facilities will contain, customary representations and warranties, events of default and covenants for transactions of this type.
To the extent any borrowings are made under the Interim Facilities Agreement, such loans will mature on the date falling 90 days after the first drawdown under the Interim Facilities Agreement (or, in respect of Interim Facility A1, 60 days).
Borrowings under the Interim Facilities Agreement and any definitive documentation for the Facilities will be subject to customary “certain funds” provisions consistent with the UK Takeover Code. Such provisions apply until the end of a customary “certain funds period” which includes, among other customary triggers in respect of the Merger lapsing or being terminated or withdrawn, a long stop date of February 28, 2023, consistent with the requirements of the UK Takeover Code.
The obligations of NortonLifeLock under the definitive documentation for the Facilities will be guaranteed, jointly and severally, by all of the Company’s present and future domestic subsidiaries, with certain exceptions in accordance with the terms of the definitive documentation for the Facilities, as applicable.
Quantification of Payments and Benefits to NortonLifeLock’s Named Executive Officers
The Merger does not constitute a “change in control” under any employment or compensation arrangements of NortonLifeLock and our named executive officers are not entitled to any additional compensation or benefits that relate to or are contingent upon the Merger.
Interests of Certain NortonLifeLock Directors and Executive Officers in the Merger
In considering the recommendation of the NortonLifeLock board of directors that the NortonLifeLock stockholders vote “FOR” each of the NortonLifeLock proposals, NortonLifeLock stockholders should be aware that certain of the executive officers and directors of NortonLifeLock have interests in the Merger that may be different from, or in addition to, the interests of NortonLifeLock’s stockholders generally.
The transaction does not constitute a “change in control” under any compensation or benefit plans, programs or arrangements of NortonLifeLock and NortonLifeLock’s directors and named executive officers are not entitled to any additional compensation or benefits that relate to or are contingent upon the transaction. However, NortonLifeLock’s directors and executive officers will continue to serve on the board of directors and as executive officers of the combined company, respectively. The members of the NortonLifeLock’s board of directors were aware of and considered these interests in evaluating and negotiating the Co-operation Agreement and approving the Merger and in determining to recommend to NortonLifeLock stockholders that they adopt the Co-operation Agreement.
No Appraisal or Dissenters’ Rights
No appraisal or dissenters’ rights are available to the holders of NortonLifeLock common stock in connection with the Merger.
 
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United States Federal Income Tax
Our stockholders will not realize gain or loss in connection with the Merger with respect to their NortonLifeLock Shares for United States federal income tax purposes.
Accounting Treatment
NortonLifeLock prepares its financial statements in accordance with U.S. GAAP. The Merger will be accounted for as a business combination using the acquisition method of accounting under the authoritative guidance with NortonLifeLock being treated as the acquirer. The Merger will result in the recognition of assets acquired and liabilities assumed based on their estimated fair value. The preliminary allocation of the purchase price used in the pro forma combined financial information presented elsewhere in this proxy statement is based on preliminary estimates and currently available information. These assumptions and estimates, some of which cannot be finalized until the completion of the Merger, may be revised as additional information becomes available upon completion of the Merger and finalization of the valuation of Avast’s assets and liabilities. The final determination of the allocation of the purchase price will be based on the fair values of the assets and liabilities of Avast as of the closing date of the Merger.
Irrevocable Undertakings
NortonLifeLock and Bidco have received irrevocable commitments to vote or procure votes in favor of the resolutions relating to the Scheme at the Court Meeting and the General Meeting (or, in the event that the Merger is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) from each of the Supporting Shareholders, in each case in respect of their entire holding of Avast Shares. These irrevocable commitments are in respect of, in aggregate, 381,057,227 Avast Shares, representing approximately 36.93% of the existing issued ordinary share capital of Avast as of the close of business on August 9, 2021, being the latest practicable date prior to the Rule 2.7 Announcement.
In addition, pursuant to the undertakings and subject to certain exceptions therein, each of the Avast directors that holds Avast Shares, representing in aggregate approximately 35.96% of the existing issued ordinary share capital of Avast as of the close of business on August 9, 2021, has undertaken to elect the Majority Stock Option in respect of their entire beneficial holdings of Avast Shares.
The undertakings will continue to be binding in the event that a higher competing offer is made for Avast. They will cease to be binding in certain circumstances, including (i) if the Scheme becomes effective in accordance with its terms (or a Takeover Offer, if applicable, is declared unconditional in accordance with the requirements of the UK Takeover Code), (ii) if Bidco announces, with the consent of the Panel, that it does not intend to proceed with the Merger and no new, revised or replacement offer or scheme is announced within two business days of such announcement, (iii) if the Scheme lapses or is withdrawn unless Bidco announces, within five business days of such lapse or withdrawal and with the consent of the Panel, a firm intention to switch to a Takeover Offer, (iv) if the Scheme does not become effective (or the Takeover Offer, if applicable) by the Long Stop Date, (v) if NortonLifeLock and/or Bidco announce an amendment to the terms of the Scheme (or the Takeover Offer, if applicable), the effect of which would be to remove the ability for Avast shareholders to elect for the Majority Stock Option (or any extended, increased or otherwise improved version of the Majority Stock Option), or (vi) a competing offer for Avast is declared unconditional. In addition, certain Avast directors’ irrevocable commitments may be terminable, and other Avast directors’ elections for the Majority Stock Option may be revoked (in each case in the discretion of the relevant Avast director), in each case if Bidco announces that it intends to increase the consideration payable in respect of the Majority Cash Option, but does not announce a proportionate increase in the consideration payable in respect of the Majority Stock Option (with agreed metrics set out in the irrevocable undertakings for determining proportionate increases and non-proportionate increases). In addition, if Bidco announces that it intends to implement the Merger by way of a Takeover Offer rather than by way of the Scheme, and sets the acceptance condition for such Takeover Offer at less than 75%, the Avast directors’ obligation to elect the Majority Stock Option would no longer apply.
 
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(in thousands of Dollars, except per share amounts)
On August 10, 2021, pursuant to Rule 2.7 of the Code, NortonLifeLock and Avast released the Rule 2.7 Announcement disclosing the terms on which NortonLifeLock intends to make a recommended offer to acquire the entire issued and to be issued share capital of Avast (the holders of such shares, the “Sellers”), both directly and indirectly through Bidco, in a cash and stock transaction. Under the terms of the Rule 2.7 Announcement, Avast shareholders will be entitled to receive, for each Avast share held by such shareholders, the Majority Cash Option. As an alternative to the Majority Cash Option, Bidco will make available to Avast shareholders the option to elect for a different mix of cash and share consideration, whereby Avast shareholders will be entitled to receive, for each Avast share held by such shareholders, the Majority Stock Option.
Each of the Avast directors who holds Avast Shares has irrevocably undertaken, subject to certain exceptions, to elect for the Majority Stock Option, as well as to vote or procure votes in favor of the Scheme (or, in the event that the Merger is implemented by way of a Takeover Offer, accept or procure acceptance of the Takeover Offer), in respect of their entire beneficial holdings of Avast Shares. Depending on the elections of other Avast shareholders, and on the same basis as set out above, the Merger values the entire issued and to be issued ordinary share capital of Avast between approximately $8.6 billion (if all Avast shareholders, other than the Avast directors who hold Avast Shares, receive the Majority Cash Option) and $8.1 billion (if all Avast shareholders elect for the Majority Stock Option). Upon completion of the Merger, and subject to the elections made by Avast shareholders, Avast shareholders will own between approximately 14% (if all Avast shareholders, other than the Avast Directors who hold Avast Shares, receive the Majority Cash Option) and approximately 26% (if all Avast shareholders elect for the Majority Stock Option) of the Combined Company.
The pro forma financial information herein has been prepared under the assumption that all Avast shareholders, other than the Avast directors who hold Avast Shares, receive the Majority Cash Option. Additionally, Note 6 to the pro forma financial information contains a summary of the expected impact to the pro forma financial information presented in the case where all Avast shareholders elect the Majority Stock Option.
In addition to the consideration payable in connection with the Merger, the Avast board of directors will be entitled to declare and pay an interim dividend with respect to the six month period ended June 30, 2021 of 4.8 cents per Avast Share (the “Interim Avast Dividend”). In addition to the consideration payable in connection with the Merger and the Interim Avast Dividend, if the Merger has not become effective before March 1, 2022 the Avast board of directors reserves the right to declare and pay either a further interim dividend or recommend and pay a final dividend in respect to the year ending December 31, 2021 of 11.2 cents per Avast Share (the “Second Avast Dividend”). In addition to the consideration payable in connection with the Merger and the Interim Avast Dividend and the Second Avast Dividend, if the Merger has not become effective before August 11, 2022, the Avast board of directors reserves the right to declare and pay an interim dividend with respect to the six month period ended June 20, 2022 of 4.8 cents per Avast Share (the “Third Avast Dividend”).
The following unaudited pro forma condensed combined financial information gives effect to the Merger, which includes adjustments for the following:

The conversion of Avast’s historical financial statements prepared in accordance with IFRS as issued by the IASB to U.S. GAAP;

Certain reclassifications to conform Avast’s historical financial statement presentation to NortonLifeLock’s presentation;

Application of the acquisition method of accounting under the provisions of ASC 805, and to reflect the aggregate offer consideration in exchange for 100% of all outstanding Avast Shares;

Proceeds and uses of the new and amended financing arrangements entered into in connection with the Merger; and

Transaction costs in connection with the Merger.
 
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The following unaudited pro forma condensed combined statements and related notes are based on and should be read in conjunction with (i) the historical consolidated financial statements of NortonLifeLock and the related notes included in NortonLifeLock’s Annual Report on Form 10-K for the year ended April 2, 2021 which was filed with the SEC on May 21, 2021 and the historical unaudited consolidated financial statements of NortonLifeLock and related notes included in NortonLifeLock’s Quarterly report on Form 10-Q for the period ended July 2, 2021 which was filed with the SEC on August 2, 2021, each of which is incorporated by reference in this document, and (ii) the audited consolidated financial statements of Avast for the period ended December 31, 2020 and the related notes contained herein. For the purposes of the preparation of the pro forma financial information, the operational results of Avast for the quarter ended June 30, 2021 have been derived from the unaudited 2021 half year consolidated financial statements for the period ended June 30, 2021 and related notes as contained herein.
Per the requirements of Regulation S-X 210.11-02(c)(3), where the financial year end of the entity acquired differs from the registrant’s most recent fiscal year end by more than one fiscal quarter, the acquired entity’s statement of comprehensive income must be brought up to within one fiscal quarter of the registrant’s most recent fiscal year end. As Avast’s year end does not differ from NortonLifeLock’s by more than a fiscal quarter, NortonLifeLock elected to present the statement of comprehensive income using the December 31, 2020 financial year end of Avast.
The unaudited pro forma condensed combined statements of income for the three months ended July 2, 2021 and the year ended April 2, 2021 combine the historical consolidated statements of income of NortonLifeLock and Avast, giving effect to the Merger as if it had been completed on April 4, 2020. The accompanying unaudited pro forma condensed combined statement of financial position as of July 2, 2021 combines the historical consolidated statements of financial position of NortonLifeLock and Avast, giving effect to the Merger as if it had been completed on July 2, 2021.
The historical consolidated financial information has been adjusted in the pro forma financial statements to give effect to pro forma events that are (1) directly attributable to the Merger, (2) factually supportable and (3) with respect to the unaudited pro forma condensed combined statements of income, expected to have a continuing effect on the combined results of NortonLifeLock and Avast. The statements contained herein do not reflect the costs of any integration activities or benefits that may result from the realization of future cost savings from operating efficiencies, or any other synergies that may result from the Merger.
The statements and related notes are being provided for illustrative purposes only and do not purport to represent what the combined company’s actual results of operations or financial position would have been had the Merger been completed on the dates indicated, nor are they necessarily indicative of the combined company’s future results of operations or financial position for any future period.
The pro forma adjustments are based upon available information and certain assumptions as described in the accompanying notes to the unaudited pro forma condensed combined financial information which management believes are reasonable under the circumstances. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information.
Under ASC 805, generally all assets acquired and liabilities assumed are recorded at their acquisition date fair value. For pro forma purposes, the fair value of Avast’s identifiable tangible and intangible assets acquired and liabilities assumed are based on a preliminary estimate of fair value. Any excess of the purchase price over the fair value of identified assets acquired and liabilities assumed will be recognized as goodwill. Management believes the fair values recognized for the assets acquired and liabilities assumed are based on reasonable estimates and assumptions.
*Certain figures included in this pro forma financial information have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.
 
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NortonLifeLock Inc.
Unaudited Pro Forma Condensed Combined Statement of Financial Position
As of July 2, 2021
(in millions of Dollars, except per share amounts)
Historical
NortonLifeLock
Quarter Ended
July 2, 2021
(in U.S. GAAP)
Historical
Avast
Quarter Ended
June 30, 2021
(in IFRS)
Pro Forma
Reclassification
Adjustments
Pro Forma
Transaction
Adjustments
Pro Forma
Condensed
Combined
(in U.S. GAAP)
Note 2
Note 3 – 6
Assets
Current assets:
Cash and cash equivalents
1,230 358 (1,582)
(4.1)
6
Short-term investments
15 15
Accounts receivable, net
105 48 153
Trade and other receivables
48 (48)
Capitalized contract costs
34 (34)
Prepaid expenses
9 (9)
Tax receivable
3 (3)
Other current assets
198 53 251
Other financial assets
7 (7)
Assets held for sale
238 238
Total current assets
1,786 459 (1,582) 663
Property and equipment, net
71 35 106
Property, plant and equipment
35 (35)
Operating lease assets
71 53 124
Right-of-use asset
51 (51)
Intangible assets, net
1,096 115 3,085
(4.2)
4,296
Intangible assets
115 (115)
Deferred tax asset
176 (176)
Goodwill
2,863 1,967 4,722
(4.3)
9,552
Capitalized contract costs
2 (2)
Prepaid expenses
1 (1)
Other long-term assets
678 189 (51)
(4.8)
816
Other financial assets
8 (8)
Total assets
6,565
2,814
4
6,174
15,557
Liabilities and stockholders’ equity (deficit)
Current liabilities
Accounts payable
76 62 138
Trade and other payables
62 (62)
Accrued compensation and benefits
66 66
Current portion of long-term debt
438 42 124
(4.4)
604
Term loan
42 (42)
Contract liabilities
1,176 471 (184)
(4.7)
1,463
Deferred revenues
471 (471)
Current operating lease liabilities
24 7 31
Lease liability
7 (7)
Provisions
22 (22)
Income tax liability
17 (17)
Other current liabilities
441 39 480
Total current liabilities
2,221 621 (60) 2,782
Long-term debt
3,422 778 4,566
(4.4)
8,766
Term loan
778 (778)
Long-term contract liabilities
55 37 (15)
(4.7)
77
Deferred revenues
37 (37)
Deferred income tax liabilities
146 20 617
(4.9)(u)
783
Deferred tax liability
20 (20)
Long-term income taxes payable
1,103 1,103
Long-term operating lease liabilities
60 51 111
Lease liability
51 (51)
Provisions
Other long-term liabilities
55 1 56
Other non-current liabilities
1 (1)
Total liabilities
7,062
1,508
5,108
13,678
Stockholders’ equity (deficit):
Common stock and additional paid-in capital
2,049 532 1,066
(4.5)
3,647
Share capital
139 (139)
Share premium, statutory and other reserves
395 (395)
Translation differences
4 4
Accumulated other comprehensive income
49 49
Retained earnings (accumulated deficit)
(2,595) 768 6 (1,821)
Total stockholders’ equity (deficit)
(497) 1,306 4 1,066 1,879
Total liabilities and stockholders’ equity (deficit)
6,565 2,814 4 6,174 15,557
 
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NortonLifeLock Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations and Comprehensive Income
For the Quarter Ended July 2, 2021
(in millions of Dollars, except per share amounts)
Historical
NortonLifeLock
Quarter Ended
July 2, 2021
(in U.S. GAAP)
Historical
Avast
Quarter Ended
June 30, 2021
(in IFRS)
Pro Forma
Reclassification
Adjustments
Pro Forma
Transaction
Adjustments
Pro Forma
Condensed
Combined
(in U.S. GAAP)
Note 2
Note 3 – 6
Net revenues
686 234 (6)
(5.5)
914
Revenues
234 (234)
Cost of revenues
102 37 (6)