Cybersecurity-related exchange traded funds led gains Thursday after Avast Software made a $1.3 billion bid to acquire rival AVG Technologies N.V.
The PureFunds ISE Cyber Security ETF (NYSEArca: HACK) rose 1.7% Thursday and was testing its resistance at the long-term, 200-day simple moving average. Additionally, the First Trust NASDAQ CEA Cybersecurity ETF (NasdaqGM: CIBR) was up 0.6%.
Avast and AVG announced they have entered a purchase agreement in which Avast will offer to acquire shares of AVG for $25.00 per share in cash for approximately $1.3 billion and “will be combining complementary strengthens to position Avast for continued growth in the security industry,” according to a press release.
AVG shares surged 31.6% to $24.73 per share Thursday on the offer.
AVG is the tenth largest holding in HACK, accounting for 4.2% of the ETF’s portfolio. AVG makes up a smaller 1.1% of CIBR’s underlying holdings.
The deal is seen as a way for Avast Software to strengthen its competitiveness in the information security industry.
“We are in a rapidly changing industry, and this acquisition gives us the breadth and technological depth to be the security provider of choice for our current and future customers,” Vince Steckler, chief executive officer of Avast Software, told the Wall Street Journal.[related_stories]
According to the press release, the deal will help Avast gain scale, technological depth and geographical breadth so that the new organization can take advantage of emerging growth opportunities and enhance organizational efficiency.
“Our new scale will allow us to accelerate investments in growing markets and continue to focus on providing comprehensive and simple-to-use solutions for consumers and businesses alike,” AVG Chief Executive Officer Gary Kovacs told the WSJ.
Cybersecurity-related ETFs have quickly gained a wide following after a number of high-profile cyber security breaches since the second quarter of 2014 involving companies such as Apple (NasdaqGS: AAPL), Tesla (NasdaqGS: TSLA), Starbucks (NasdaqGS: SBUX) and, on multiple occasions, the federal government.
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