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AVG shares spike after Avast merger announcement

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AVG Technologies' stock surged nearly 31 percent on Thursday after announcing a $1.3 billion purchase agreement with Avast Software.

Avast, a private security software company, will acquire AVG for $25 per share in cash. On Thursday, AVG shares traded near $24.70 a share.

The purchase is expected to help Avast create more advanced personal security products.

"We believe that joining forces with Avast fully supports our growth objectives," AVG CEO Gary Kovacs said. "As the definition of online security continues to shift from being device-centric, to being concerned with devices, data and people, we believe the combined company, with the strengthened value proposition, will emerge as a leader in this growing market."

Analysts at JMP Securities said this deal kicks off "a number of transactions consolidating the consumer anti-virus software industry."

"As we have previously discussed," JMP said in a Thursday note to clients, "consumer anti-virus is well-suited to a roll-up as these companies share identical R&D efforts (devising solutions to viruses and other threats), are highly profitable, often have similar cultures, and often have complementary geographic coverage."

AVG also reported its preliminary revenue second quarter results. The online security company estimates its revenue will be between $104 million and $106 million.

AVG's shares have spiked more than 22 percent year to date.

AVG's year-to-date performance

Disclosure: JMP makes a market in AVG securities.