Broadcom to Buy Symantec's Enterprise Unit for $10.7 Billion in Software Push

11 Août, 2019, 02:30 | Auteur: Auguste Feret
  • Broadcom buys Symantec's enterprise security biz for £8.8bn

Computer chipmaker Broadcom Inc.is about to acquire cybersecurity firm Symantec Corp.'s enterprise business for about $10 billion, according to separate reports from the Wall Street Journal and Reuters late today that cite people familiar with the matter.

The deal, which includes the Symantec name, is the "next logical step" for Broadcom following its acquisitions of Brocade and CA Technologies, the company reckons, and will help it to expand its enterprise software offering; now, the company faces stiff competition in the market offering protection to mobile devices and is absent from areas such as security forensics and investigation.

Symantec provides cloud, web and data security for organizations.

Deploying Symantec's enterprise security suite through Broadcom's channels will strengthen its differentiated portfolio license agreement (PLA) strategy of offering significant overall savings to customers, while creating a predictable, recurring revenue stream for its business that will drive returns for shareholders. The transaction is expected to generate more than $1 billion of run-rate cost synergies within 12 months following close.

The deal is a shot in the arm for Broadcom, which has been trying diversify into software business since a year ago when it bought USA business software maker CA Inc for US$18.9 billion.

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Broadcom said it expected the cash deal to close in Q1 2020.

The chip market is still suffering from the impact of the trade dispute between China and the United States, but business conditions have not worsened since the company gave its forecast in June. Broadcom stock moved up about 1% in after-hours trading. So far he's been successful in turning them around.

While Symantec's revenue may not be growing, the purchase of a piece of the company would bring with it wider profit margins - higher than those typically achieved in the chip industry, which historically requires greater levels of investment and higher costs to build products.

The enterprise business generated about US$2.3 billion in sales in the past fiscal year. Broadcom's margin is predicted to be a full 10 percentage points lower than that. Symantec shares were up almost 4% after hours.

The deal is the latest in a raft of takeovers as Broadcom seeks to establish itself as a major IT infrastructure player, expanding beyond its core competence of processors.

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