Broadcom is in advanced calls to provide Symantec
(Bloomberg) – Broadcom Inc. is in advanced talks on buying cyber security firm Symantec Corp., according to people who are familiar with the case, and is seeking a wider extension to the more profitable software.
Broadcom can now make an agreement to buy Mountain View, the California-based company within a few weeks, the people said, asking not to be identified because the case is not public. No deal has been concluded and the conversations could go through, the people said.
A representative of Symantec refused to comment. A Broadcom representative did not immediately respond to a request for comment.
Symantec shares rose 18% in premarket trading Wednesday in New York. They closed Tuesday at 22.10, giving the company a market value of around $ 13.7 billion. Broadcom sank about 4% in late trading on Tuesday. They had dropped 1.7% in regular New York trading to close at $ 295.33, giving the semiconductor manufacturer a market value of around $ 118 billion.
What Bloomberg Intelligence says:
Broadcom's potential acquisition of another $ 4 billion in software sales is probably the most ambitious deal yet – vacant Symantec has lost part, even in its core business. Broadcom CEO Hock Tan is likely to have to aggressively cut Symantec costs while keeping sales stable.
– Anand Srinivasan, Technology Analyst
The agreement wanted to mark Broadcom's second major investment in software, after CA Technologies. This transaction asked some investors to express concern that Broadcom's CEO Hock Tan's acquisition strategy was stretched too far after playing a key role in consolidating into the $ 470 billion chip industry.
This deal also came after San Jose, California-based Broadcom left a hostile pursuit of competing chipmaker Qualcomm Inc., when US President Donald Trump blocked the transaction referring to national security risks.
Some analysts saw the potential purchase of Symantec as positive for Broadcom.
"Symantec wanted to make a perfect fit for the Broadcom portfolio, wrote Harsh Kumar, an analyst at Piper Jaffray, in a note to investors. He said the situation is similar to Broadcom's CA acquisition," which ultimately proved to be Be very successful under the Broadcom umbrella. "
Symantec Challenges
Symantec is the world's largest manufacturer of cyber security software, providing products and services to more than 350,000 organizations and 50 million people, according to the annual report.
has met a list of challenges in the past year, in violation of increased competition, the abrupt resignation of its CEO, declining consumer interest in antivirus programs, and a financial survey completed with revised earnings, shares have won around 17% this year and are recovering from 33% decline in 2018.
Activist Investor Starboard Value LP won three board seats on the company in September
Broadcom would not be the first chip maker to try a foray in security software. In 2011 Intel acquired McAfee Inc. for $ 7.7 billion. Intel's plan was to connect some of the software's capabilities to its market-leading PC processors. The semiconductor manufacturer was never able to pull it off, and ended up flushing the device in 2016 in a sale to TPG who appreciated the $ 4.2 billion business.
Under Tan, Broadcom has followed another strategy for software. Tan said he bought "franchises", "groups, or companies within companies that have sustainable market positions through technology management. He invests in them to maintain that management, running them as different parts of Broadcom, rather than integrating the transferred products "
" "Broadcom's approach to M & A is delivering high cash returns, which has been quite successful in achieving," Morgan Stanley analyst Craig Hettenbach wrote in a report earlier this week. led the wave of consolidation across the industry. But with many assets that are already outside the board and the remaining companies trading with high valuation multiples, the possibility of semis is much lower today. "
(Updates with analyst comments in ninth paragraph.)
– With help from Dinesh Nair.
To contact journalists on this story: Liana Baker in New York at lbaker75@bloomberg.net, Ed Hammond in New York at ehammond12@bloomberg.net; Kiel Porter in Chicago at kporter17@bloomberg.net; Ian King in San Francisco at ianking@bloomberg.net
To contact the editors responsible for this story: Liana Baker at lbaker75 @ bloomberg.net, Matthew Monks, Dan Wilchins
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