SAN JOSE, Calif., Aug. 8, 2019 /PRNewswire/ -- Broadcom, Inc.,
(NASDAQ: AVGO), a global technology leader that designs, develops
and supplies semiconductor and infrastructure software solutions,
today announced an agreement to acquire the enterprise security
business of Symantec Corporation (NASDAQ: SYMC) for $10.7 billion in cash. The addition of Symantec's
enterprise security portfolio will significantly expand Broadcom's
infrastructure software footprint as it continues to build one of
the world's leading infrastructure technology companies.
Hock Tan, President and Chief Executive Officer of Broadcom,
said, "M&A has played a central role in Broadcom's growth
strategy and this transaction represents the next logical step in
our strategy following our acquisitions of Brocade and CA
Technologies. Symantec's enterprise security business is recognized
as an established leader in the growing enterprise security space
and has developed some of the world's most powerful defense
solutions that protect against today's evolving threat landscape
and secure data from endpoint to cloud. We look forward to
expanding our footprint of mission critical infrastructure software
within our core Global 2000 customer base."
With product lines across endpoint security, web security
services, cloud security and data loss prevention, Symantec's
enterprise security business offers its customers a best-in-class
suite of integrated enterprise security solutions. 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 drive more than $2 billion of sustainable, incremental, run-rate
revenues and approximately $1.3
billion of Pro Forma EBITDA, including synergies. The
transaction is expected to generate more than $1 billion of run-rate cost synergies within 12
months following close. Additionally, Broadcom expects to achieve
double-digit cash-on-cash returns on its investment.
Transaction Details
Under the terms of the asset purchase agreement, which has been
approved by the Broadcom Board of Directors, Broadcom will pay
Symantec $10.7 billion in cash at
closing. Broadcom intends to fund the transaction with proceeds
from new committed debt financing.
Broadcom expects its current dividend policy of delivering 50%
of its prior fiscal year free cash flow to shareholders to remain
unchanged. However, Broadcom now intends to utilize excess cash
flow beyond its dividend payments to focus on rapidly paying down
debt as opposed to stock repurchases. Broadcom believes access to
the investment grade credit market is fundamental to its strategy
and fully intends to maintain its investment grade credit
rating.
The transaction, which is expected to close in the first quarter
of Broadcom's fiscal year 20201, is subject to
regulatory approvals in the U.S., EU and Japan and other customary closing
conditions.
Following the closing of the transaction, Broadcom will own and
incorporate the Symantec brand name into the Broadcom
portfolio.
Reaffirms Fiscal Year 2019 Revenue Guidance
Broadcom today also reaffirmed its fiscal year 2019 revenue
guidance of $22.5 billion, with
$17.5 billion from semiconductor
solutions and $5 billion from
infrastructure software, as last provided in its second quarter
fiscal year 2019 earnings release on June
13, 2019.
Conference Call
Broadcom will host a conference call to discuss details of the
transaction. A live webcast and the accompanying presentation
relating to the transaction will be available in the "Investors"
section of Broadcom's website at https://investors.broadcom.com in
advance of the conference call.
Conference call date: August 8,
2019
Time: 2:00 PM Pacific (5:00 PM Eastern)
Dial in #: US (866) 610-1072, International +1 (973) 935-2840
Passcode is 7958018
A replay of the call will be available for one week by dialing
(800) 585-8367 (US) or +1 (404) 537-3406 (International) and the
passcode is 7958018. A webcast of the conference call will also be
available in the "Investors" section of Broadcom's website at
https://investors.broadcom.com.
About Broadcom
Broadcom Inc., (NASDAQ: AVGO), a Delaware corporation headquartered in
San Jose, CA, is a global
technology leader that designs, develops and supplies a broad range
of semiconductor and infrastructure software solutions. Broadcom's
category-leading product portfolio serves critical markets
including data center, networking, enterprise software, broadband,
wireless, storage and industrial. Broadcom's solutions include data
center networking and storage, enterprise and mainframe software
focused on automation, monitoring and security, smartphone
components, telecoms and factory automation.
Cautionary Statement Regarding Forward-Looking
Statements
This announcement contains forward-looking statements (including
within the meaning of Section 21E of the United States Securities
Exchange Act of 1934, as amended, and Section 27A of the United
States Securities Act of 1933, as amended) relating to Broadcom.
These statements include, but are not limited to, statements
regarding the expected completion and timing of the proposed
transaction, expected benefits and costs of the proposed
transaction, and management plans relating to the proposed
transaction, and statements that address Broadcom's expected future
business and financial performance and other statements identified
by words such as "will", "expect", "believe", "anticipate",
"estimate", "should", "intend", "plan", "potential", "predict"
"project", "aim", and similar words, phrases or expressions. These
forward-looking statements are based on current expectations and
beliefs of Broadcom's management, as well as assumptions made by,
and information currently available to, Broadcom's management,
current market trends and market conditions and involve risks and
uncertainties, many of which are outside of Broadcom's and
Broadcom's management's control, and which may cause actual results
to differ materially from those contained in forward-looking
statements. Accordingly, you should not place undue reliance on
such statements.
Those risks, uncertainties and assumptions include: the risk
that the proposed transaction may not be completed in a timely
manner or at all, which may adversely affect Broadcom's business
and the price of the common stock of Broadcom; the failure to
satisfy any of the conditions to the consummation of the proposed
transaction, including the receipt of certain regulatory approvals;
the occurrence of any event, change or other circumstance that
could give rise to the termination of the asset purchase agreement;
the effect of the announcement or pendency of the proposed
transaction on Broadcom's business relationships, operating results
and business generally; risks that the proposed transaction
disrupts current plans and operations and the potential
difficulties in employee retention as a result of the proposed
transaction; risks related to diverting management's attention from
ongoing business operations; the outcome of any legal proceedings
that may be instituted related to the asset purchase agreement or
the proposed transaction; unexpected costs, charges or expenses
resulting from the proposed transaction; the ability of Broadcom to
achieve its plans, forecasts and other expectations (including
regarding expected revenues, returns and synergies) with respect to
the acquired business after completion of the proposed transaction;
and other risks described in Broadcom's and its predecessors'
filings with the United States Securities and Exchange Commission,
such as Quarterly Reports on Form 10-Q and Annual Reports on Form
10-K.
Other particular uncertainties that could materially affect
future results include risks associated with: any loss of
Broadcom's significant customers and fluctuations in the timing and
volume of significant customer demand; Broadcom's dependence on
contract manufacturing and outsourced supply chain; any other
acquisitions Broadcom may make, such as delays, challenges and
expenses associated with receiving governmental and regulatory
approvals and satisfying other closing conditions, and with
integrating acquired companies with Broadcom's existing businesses
and Broadcom's ability to achieve the benefits, growth prospects
and synergies expected by such acquisitions; global economic
conditions and concerns; government regulations and trade
restrictions; Broadcom's ability to accurately estimate customers'
demand and adjust its manufacturing and supply chain accordingly;
Broadcom's significant indebtedness, including the additional
significant indebtedness that Broadcom expects to incur in
connection with the proposed transaction, and the need to generate
sufficient cash flows to service and repay such debt, and ability
to maintain an investment grade credit rating; dependence on and
risks associated with distributors of Broadcom products; dependence
on senior management and Broadcom's ability to attract and retain
qualified personnel; international political and economic
conditions; Broadcom's dependency on a limited number of suppliers;
quarterly and annual fluctuations in operating results; the amount
and frequency of Broadcom stock repurchases; cyclicality in the
semiconductor or enterprise software industry or in target markets;
Broadcom's competitive performance and ability to continue
achieving design wins with its customers, as well as the timing of
any design wins; prolonged disruptions of Broadcom's or its
contract manufacturers' manufacturing facilities or other
significant operations; Broadcom's ability to improve its
manufacturing efficiency and quality; Broadcom's involvement in
legal or administrative proceedings; Broadcom's dependence on
outsourced service providers for certain key business services and
their ability to execute to Broadcom's requirements; Broadcom's
ability to maintain or improve gross margin; Broadcom's ability to
protect its intellectual property and the unpredictability of any
associated litigation expenses; compatibility of Broadcom's
software products with operating environments, platforms or
third-party products; Broadcom's ability to enter into satisfactory
software license agreements; sales to Broadcom's government
clients; availability of third party software used in Broadcom's
products; use of open source code sources in Broadcom's products;
any expenses or reputational damage associated with resolving
customer product warranty and indemnification claims; Broadcom's
ability to sell to new types of customers and to keep pace with
technological advances; market acceptance of the end products into
which Broadcom's products are designed; Broadcom's ability to
protect against a breach of security systems; changes in accounting
standards; fluctuations in foreign exchange rates; Broadcom's
provision for income taxes and overall cash tax costs, legislation
that may impact its overall cash tax costs and its ability to
maintain tax concessions in certain jurisdictions; and other events
and trends on a national, regional and global scale, including
those of a political, economic, business, competitive and
regulatory nature.
Forward-looking statements speak only as of the date of this
communication. Broadcom does not undertake any intent or obligation
to publicly update or revise any of the estimates and other
forward-looking statements made in this announcement, whether as a
result of new information, future events or otherwise, except as
required by law.
Non-GAAP Financial Measures
In addition to GAAP reporting, Broadcom provides investors with
net income, operating income, gross margin, operating expenses and
other data, and has previously provided net revenue data, on a
non-GAAP basis. This non-GAAP information includes the effect,
where applicable, of purchase accounting on revenue, and excludes
amortization of acquisition-related intangible assets, stock-based
compensation expense, restructuring, impairment and disposal
charges, acquisition-related costs, including integration costs,
purchase accounting effect on inventory, litigation settlements,
debt-related costs, gain (loss) on extinguishment of debt, gain
(loss) on dispositions of acquisition-related assets, income (loss)
from discontinued operations and non-GAAP tax reconciling
adjustments. Management does not believe that these items are
reflective of the Company's underlying performance. The exclusion
of these and other similar items from Broadcom's non-GAAP financial
results should not be interpreted as implying that these items are
non-recurring, infrequent or unusual. Broadcom believes this
non-GAAP financial information provides additional insight into the
Company's on-going performance and has therefore chosen to provide
this information to investors for a more consistent basis of
comparison and to help them evaluate the results of the Company's
on-going operations and enable more meaningful period to period
comparisons. These non-GAAP measures are provided in addition to,
and not as a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP.
Broadcom is not readily able to provide a reconciliation of the
projected non-GAAP financial information presented herein to the
relevant projected GAAP measures without unreasonable effort. A
reconciliation of Broadcom's GAAP to non-GAAP historical financial
data is available in the Investor Center on its website.
Contacts
Beatrice F. Russotto
Investor Relations
408-433-8000
investor.relations@Broadcom.com
Joele Frank / Steve Frankel / Andi
Rose
Joele Frank, Wilkinson Brimmer
Katcher
212-355-4449
1 Broadcom's 2020 first fiscal quarter begins
November 4, 2019.
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SOURCE Broadcom Inc.