Cohesity and Veritas join forces, creating US$7B data security business

Cohesity has snapped up Veritas' data protection business, creating a US$7 billion data protection and management entity. 

Sanjay Poonen will lead the combined organisation as CEO and president while Veritas CEO Greg Hughes will serve as a board member and strategic advisor to Poonen after the close of the transaction. 

The combined company will bring together hundreds of exabytes of protected data, a global go-to-market footprint, high penetration in the enterprise and a strong partner ecosystem across all segments of cloud service providers, security players, value-added resellers (VAR), system integrators and hardware original equipment manufacturers (OEM).

Together, the companies will target a total addressable market (TAM) of over US$30 billion. This figure includes the data replication and protection software market, estimated to be US$12.2 billion in 2024 by IDC.

"This deal will combine Cohesity’s speed and innovation with Veritas' global presence and installed base" Poonen said. "We will lead the next era of AI-powered data security and management by bringing together the best of both product portfolios – Cohesity's scale-out architecture ideally suited for modern workloads and strong generative AI [artificial intelligence] and security capabilities and Veritas’ broad workload support and significant global footprint, particularly in the Global 500 and large public sector agencies."

"This combination will be a win-win for our collective 10,000 customers and 3,000 partners and I can't wait to work with the Veritas team to bring our vision to life."

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

Hughes added that bringing Veritas' differentiated cloud-native architecture to Cohesity's innovation engine will ideally position the organisation's offerings to customers. 

Poonen explained existing products will continue to be supported for many years while leveraging joint technologies to provide the most innovative future roadmap.

"We are deeply committed to both Cohesity and Veritas customers, partners and employees as we accelerate customer-driven innovation as one company," he said.

The remaining assets of Veritas’ businesses will form a separate company, "DataCo", featuring Veritas’ InfoScale, data compliance and backup exec businesses.

This will function autonomously, enhancing agility and adaptability, enabling the businesses to implement a sharply focused, customer-centric approach. 

Each entity will have dedicated research and development efforts, aiming to deliver specialised solutions tailored precisely to their respective markets. DataCo will be led by CEO Lawrence Wong, currently SVP of strategy and products at Veritas. 

On a pro forma basis for the fiscal year ending July 2023, the combined Cohesity and Veritas entity had revenues of over US$1.6 billion, annual recurring revenue (ARR) of US$1.3 billion and a 27 per cent adjusted cash earnings before interest, tax, depreciation and amortisation (EBITDA) margin.

The transaction is expected to close by the end of 2024, subject to regulatory approval and other customary closing conditions. 

Cohesity will finance the transaction through a combination of equity and debt. The combined company will receive support from current marquee investors, including Softbank Vision Fund, Sequoia Capital, Wing Venture Capital, Premji Invest and others.

Existing Veritas shareholders, including majority owner Carlyle, will become Cohesity shareholders upon the closing of the transaction.