Broadcom Nears Deal For Unit of Symantec -- WSJ
August 08 2019 - 3:02AM
Dow Jones News
By Robert McMillan and Cara Lombardo
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 8, 2019).
Broadcom Inc. is nearing a deal to buy Symantec Corp.'s
enterprise business after its attempted purchase of the entire
cybersecurity firm fell apart.
A deal for the Symantec business could be announced as early as
Thursday, when Symantec reports its results, according to people
familiar with the matter. As with the earlier attempt, the talks
could still fall apart or the time frame could be extended.
The deal could value the Symantec division at around $10
billion, one of the people said.
Broadcom had previously been in late-stage discussions to buy
all of Symantec before the talks collapsed last month. Since then,
the two sides have restarted discussions, with Broadcom zeroing in
on the Symantec business that serves businesses and accounts for
roughly half its $5 billion in annual revenue. The consumer segment
accounts for the rest.
The deal would be big for Symantec. Its entire market value is
about $12.6 billion -- it has more than $2 billion of net debt --
compared with about $107.6 billion for Broadcom. Symantec is set to
report its fiscal first-quarter earnings Thursday afternoon.
Shares of Symantec spiked after the market closed Wednesday,
rising 13% to $23.15 after The Wall Street Journal reported on the
latest deal talks. They had fallen sharply last month when the two
companies failed to reach an agreement on terms of a full-company
sale.
The 37-year-old Symantec became a household name as a seller of
consumer antivirus software. The company also sells corporate
cybersecurity products but has struggled lately to expand that
business line.
Symantec has had a string of difficulties in recent years,
including accounting issues that led to restated financials and
executive departures. In May, its former Chief Executive Greg Clark
resigned abruptly and its chief financial officer, chief operations
officer and chief marketing officer have also recently departed. A
year ago it drew the attention of activist investor Starboard Value
LP, which struck a settlement for board representation.
Broadcom, a semiconductor powerhouse built largely through
acquisitions, has been on the hunt for more deals since President
Trump blocked its quest for rival Qualcomm Inc. in 2018, citing
security risks. Broadcom has since moved its headquarters from
Singapore to the U.S.
Broadcom Chief Executive Hock Tan has been focused on
diversifying beyond the company's core chip business and pushing
into the lucrative software arena. Last year, he struck a roughly
$19 billion deal to buy software firm CA Technologies, formerly
Computer Associates.
CA is expected to add about $3.5 billion a year to revenue, and
Symantec's enterprise unit brought in more than $2.5 billion in its
latest fiscal year ended in March.
Deals between chip makers and cybersecurity companies haven't
always produced the desired results. Intel Corp. bought McAfee in
2010 for $7.68 billion, in the chip giant's biggest-ever
acquisition at the time. McAfee's security products never combined
with Intel's hardware to generate the revenue Intel had hoped for.
The business was spun off into an independent entity in 2017, and
the Journal reported last month that it is preparing for an initial
public offering.
Technology has been the busiest sector for mergers and
acquisitions world-wide this year, as companies jockey for position
in a rapidly changing industry landscape. There have been $455.9
billion of tech deals so far this year, up from $397.2 billion in
the same period of 2018, according to Dealogic.
--Asa Fitch contributed to this article.
Write to Robert McMillan at Robert.Mcmillan@wsj.com and Cara
Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
August 08, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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