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6 Months : From Jun 2019 to Dec 2019
By Robert McMillan and Cara Lombardo
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 email@example.com
(END) Dow Jones Newswires
August 07, 2019 18:34 ET (22:34 GMT)
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