Semiconductor giant Broadcom has reached an agreement to purchase enterprise software vendor CA Technologies for almost $19bn in cash.
Broadcom has offered $44.50 per share in a transaction valued at $18.9bn.
‘With its sizeable installed base of customers, CA is uniquely positioned across the growing and fragmented infrastructure software market’
– HOCK TAN
The move come just months after US president Donald Trump signed an executive order preventing Broadcom from acquiring US chip giant Qualcomm citing national security concerns.
Broadcom was a chip firm that emerged from Hewlett-Packard in the 1960s and was acquired in 2016 by Avago Technologies and the whole company became known as Broadcom Inc. The combined company moved its corporate headquarters to Silicon Valley last year from Singapore.
Should it gain antitrust approvals in the US, the EU and Japan, the acquisition of CA Technologies represents a strategic win for Broadcom as it enables it to move into cloud and traditional enterprise software.
An established strategy
CEO Hock Tan said that the acquisition of CA continues the company’s focus on acquiring established “mission critical” technology businesses.
“This transaction represents an important building block as we create one of the world’s leading infrastructure technology companies,” Tan said.
“With its sizeable installed base of customers, CA is uniquely positioned across the growing and fragmented infrastructure software market, and its mainframe and enterprise software franchises will add to our portfolio of mission critical technology businesses. We intend to continue to strengthen these franchises to meet the growing demand for infrastructure software solutions.”
CA Technologies is an enterprise software giant that was established in 1976 by Charles Wang and Russel Artzt and grew to become one of the largest independent software corporations on the planet. A major accounting scandal prompted an SEC investigation that saw top executives at the company jailed in 2004, leading to sweeping changes at the company.
“This combination aligns our expertise in software with Broadcom’s leadership in the semiconductor industry,” said CA Technologies’ CEO Mike Gregoire.
“The benefits of this agreement extend to our shareholders who will receive a significant and immediate premium for their shares, as well as our employees who will join an organisation that shares our values of innovation, collaboration and engineering excellence. We look forward to completing the transaction and ensuring a smooth transition.”
Broadcom intends to fund the transaction with cash on hand and $18bn in new, fully-committed debt financing.
The deal is expected to close by Q4 this year.
Broadcom offices, Silicon Valley. Image: Ken Wolter/Shutterstock
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