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Broadcom to acquire Symantec for $10.7bn

Written by Mon 12 Aug 2019

Broadcom seals Symantec deal to boost enterprise cloud security offering

Broadcom has finalised a $10.7 billion cash agreement to buy the enterprise security arm of Symantec Corp.

The chip manufacturer has been seeking to expand its software efforts. With the addition of Symantec, Broadcom will be able to provide integrated enterprise security solutions, the company said in a press release.

News of Broadcom’s interest in Symantec first emerged in July, but negotiations on a proposed $15.5bn deal faltered after Symantec demanded at least $28 a share, representing a $16.7bn valuation.

Now in a statement released yesterday, Broadcom announced a deal had been agreed and that it would be paying $6 billion less than what Symantec was asking for.

“Symantec’s enterprise security business is recognized as an established leader in the growing enterprise security space and has developed some of the world’s most powerful defense solutions that protect against today’s evolving threat landscape and secure data from endpoint to cloud,” said Hock Tan, president and CEO of Broadcom.

“We look forward to expanding our footprint of mission critical infrastructure software within our core Global 2000 customer base.”

In a blogpost, research analyst house Forrester said Symantec investors will benefit most from the deal, pointing to the company’s declining stock and the 30 percent premium the deal represents over its recent share price.

Forrester added that Intel and McAfee’s recent merger provides a cautionary tale of what can go wrong when a hardware company buys a cyber security software company.

“Recent history is not very positive,” the analyst said. “While these are different companies and different eras, McAfee has lost over $3 billion in value since being acquired, before being spun out to private equity in 2016 and now rumored to be making a possible IPO.”

“The buying cycle, required R&D investment, supply chain, and go-to-market for chips is different than it is for software, and the Intel/McAfee history suggests that proposed operational synergies can be hard to realize across such diverse product lines.”

Broadcom’s first major move into enterprise software came in 2018, when the company bought software giant CA technologies in an $18 billion cash deal.

While some commentators have praised Broadcom’s subsequent ingregation of CA’s software portfolio, others have claimed cuts to CA’s operating costs imposed by Broadcom have affected customer support and risk future innovation and product development.

Written by Mon 12 Aug 2019

Tags:

broadcom M&A Symantec
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