AVG Will Pay Up To $220 Million For ‘Humanised’ MDM Specialist Location Labs

Dutch security vendor AVG Technologies is expected to step up its mobile efforts following the acquisition of the US-based mobile security specialist Location Labs.

Established in 2002, Location Labs was one of the pioneers in Mobile Device Management (MDM) software and location-aware technologies.

Under the terms of the agreement, AVG will pay approximately $140 million (£85m) now, and another $80 (£48.5m) over the next two years if certain performance metrics are met. The deal is funded by a $300 million (£182m) loan from Morgan Stanley and HSBC, with the remainder expected to be spent on further acquisitions.

“According to industry estimates, the number of mobile-connected devices will exceed the world’s population by the end of this year alone. The combined existing mobile user base of both companies gives us the unprecedented opportunity to deliver online security to approximately a quarter of a billion devices as we see more people go mobile to get online.” said Gary Kovacs, CEO of AVG Technologies.

Security for humans

Location Labs is a mobile security vendor headquartered in California. According to ChrunchBase, the company has been profitable since 2007, and has around 220 employees worldwide. Most of its income comes from existing partnerships with major mobile network operators including AT&T, T-Mobile, Telefonica, and Verizon Wireless. Some of these partners are offering Location Labs software pre-loaded on new smartphones.

“Location Labs has effectively cracked the code for mobile monetization through its highly successful business model with industry partners. This acquisition significantly accelerates AVG’s mobile strategy in this area,” explained Kovacs in a statement.

Following the acquisition, Location Labs will remain a separate entity led by its founder Tasso Roumeliotis, and continue delivering services to its customers.

“Adding AVG’s proven mobile products to our own services and products will significantly enhance the innovation and support we can provide to our partners and to additional markets worldwide,” said Roumeliotis.

Location Labs has been promoting its products as created “for humans”. These include Phone Controls – an MDM platform aimed at families which gives parents the ability to check their child’s location, see their activity and restrict mobile phone use during school time.

AVG has around 182 million active users, but most of them are likely using its well-established desktop products. The acquisition should help the company expand and improve its mobile offerings, such as the AVG AntiVirus for Android – the first security app to exceed 100 million downloads on Google Play.

Following the industry trend, AVG recently launched Zen- a single security solution that works across desktop PCs and Android-based mobile devices. If the deal goes through, the company expects its mobile business to generate $60-70 million (£36 – £43m) in 2015, and $100 million (£61m) in 2016.

AVG’s mobile push is likely the reason it recently hired a new CEO with mobile expertise. Before joining AVG, Gary Kovacs led Mozilla for almost three years, guiding the organisation through the launch of Firefox browser for mobile devices and Firefox OS. He stepped down in 2013 for unknown reasons.

The transaction is expected to close during the fourth quarter of 2014 and is subject to customary closing conditions, including shareholder approval.

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