Spending $10.7 billion! Broadcom buys more

According to foreign media reports, Broadcom (NASDAQ: AVGO) officially announced on Thursday that it will acquire the enterprise security business of antivirus software manufacturer Symantec for $10.7 billion in cash. Through this merger and acquisition transaction, Broadcom intends to expand its software business.

Prior to this, Broadcom had spent $18.9 billion to acquire software development company CA. Earlier reports also said that Broadcom was in talks with private equity firm Vista Equity Partners to acquire Tibco Software, a business software maker under the latter. Vista Equity Partners acquired Tibco Software for $4.3 billion in 2014.

Before Broadcom's aggressive push into the software industry through acquisitions, the company attempted to acquire mobile chip company Qualcomm for $117 billion last year, but the Trump administration blocked the deal on national security grounds. Regarding the acquisition of Symantec's enterprise security business, Broadcom CEO Hock Tan said in a statement on Thursday, "Mergers and acquisitions have always played a core role in Broadcom's growth strategy. The acquisition of Symantec's enterprise security business represents the next logical step in our strategy."

Broadcom said the deal with Symantec is expected to close in the first quarter of fiscal 2020 and is subject to regulatory approvals in the United States, the European Union and Japan.

In May this year, it was reported that Symantec, which has been plagued by management changes and deteriorating earnings, was in talks with Broadcom about an acquisition. However, the deal ultimately fell through because Broadcom had offered a satisfactory acquisition price, but later lowered the price, leading to the failure of the deal.

Symantec has been plagued by management chaos and turmoil in its core business in recent years as cloud security companies have taken share of the enterprise market and a new group of companies have emerged to protect mobile devices. Former Symantec CEO Greg Clark resigned in May. Clark said at the time that he wanted to spend more time with his aging father. But shortly after his departure, Symantec released its fourth consecutive quarterly earnings report that missed market expectations.

Richard Hill, a former Novellus CEO and Symantec director, was named interim president and CEO following the resignation of Clark, who succeeded Michael Brown as Symantec CEO in 2016.

Symantec's earnings report released after the market closed on Thursday showed that in the first fiscal quarter ending July 5, 2019, the company's net profit was $26 million, or $0.04 per share, compared with a net loss of $60 million, or $0.10 per share, in the same period last year. Symantec's enterprise security business, which will be sold to Broadcom, had revenue of $611 million in the first fiscal quarter, up 9.9% year-on-year, exceeding the $564.3 million expected by market analysts.

Symantec also announced Thursday that it plans to cut 7% of its global workforce, which totaled more than 11,900 as of March 29.

Broadcom's stock price rose by $0.93, or 0.34%, to close at $270.98 on Thursday. In subsequent after-hours trading, Broadcom's stock price rose by $1.02, or 0.38%, to close at $272.00. In the past 52 weeks, Broadcom's lowest stock price was $202.77 and its highest stock price was $323.20. Symantec's stock price rose by $2.51, or 12.30%, to close at $22.92 on Thursday. In subsequent after-hours trading, Symantec's stock price rose by $0.68, or 2.97%, to close at $23.60. In the past 52 weeks, Symantec's lowest stock price was $17.43 and its highest stock price was $26.07. Based on Thursday's closing price, Symantec's market value is $14.2 billion; Broadcom's market value is $108.8 billion.

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