NortonLifeLock-Avast $8.6 billion deal wins provisional UK approval

© Reuters. 3D printed models of people working on computers and padlock are seen in front of a displayed Avast logo in this picture illustration taken, February 1, 2022. REUTERS/Dado Ruvic/Illustration

(Reuters) -Britain's competition regulator said on Wednesday it has provisionally cleared NortonLifeLock (NASDAQ:NLOK)'s $8.6 billion purchase of rival Avast Plc, the final hurdle to the two firms creating a consumer security software giant.

Shares in Avast soared 42% on the news, after the firms were forced to delay the deal's closing date while awaiting regulatory approvals.

Shares in U.S-listed NortonLifeLock are down about 4.6% this year having closed slightly up on Tuesday.

Earlier this year, the UK's Competition and Markets Authority (CMA) launched a deeper investigation into the deal, noting it could harm competition and lead to British customers getting a worse deal when looking for security software.

The deal, which would combine NortonLifeLock's strength in identity theft protection and Avast's privacy, has already received the green light in the United States, Spain and Germany.

NortonLifeLock said on Wednesday it expects to close the deal by next month.

Following a more detailed Phase 2 investigation, the CMA said it had concluded that the deal does not raise competition concerns in the UK.

It noted that the merged company will face significant competition from McAfee and other smaller players while software titan Microsoft Corp (NASDAQ:MSFT) would be strengthened as a competitor.

Founded in Prague, Czech Republic, Avast is a pioneer of "freemium" software, whereby basic applications are free and subscribers pay for premium features.

NortonLifeLock, previously known as Symantec, was renamed after it sold its enterprise business to Broadcom (NASDAQ:AVGO) in 2019.

It has a larger premium business selling products to consumers to combat viruses, spyware and malware.