By Krystal Hu and Anirban Sen

NEW YORK (Reuters) -U.S. data security software firm Cohesity told Reuters on Wednesday it has agreed to acquire Veritas’s data protection business in a deal that would that would value the combined entity at $7 billion.

The cash and stock acquisition is expected help Cohesity, which is backed by Japan’s SoftBank Group, achieve positive growth margins, Cohesity CEO Sanjay Poonen said in an interview, adding that the firms together have $1.6 billion in annual revenue.

“You’ve got the fastest growth in our side and the best profitably on their side, combined together to be a profitable growth machine that’s innovating with AI,” he said.

San Jose, California-based Cohesity has raised about $1 billion in equity and $2 billion in debt from investors including Haveli Investments, Premji Invest and Madrona to help fund the deal, according to people familiar with the matter.

Cohesity’s takeover of the Veritas unit values the business at over $3 billion, including debt, one of the sources said, requesting anonymity.

Cohesity’s artificial intelligence-powered software helps organizations protect and manage their data against cybersecurity threats. Veritas is majority-owned by private equity firm Carlyle Group, which acquired the company from Symantec in 2016.

Carlyle has rolled over its stake in the unit and will join Cohesity’s board after the deal closes.

(Reporting by Krystal Hu in San Francisco and Anidban Sen in New York; Editing by Edwina Gibbs)

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