Broadcom announced it is purchasing the performance monitoring and software company CA Technologies for about $18.9 billion. CA Technologies’ shareholders will receive $44.50 per share in cash, representing a value of approximately $18.9 billion. This represents a premium of approximately 20 percent to the closing price of CA Technologies’ common stock today.
Following reports earlier today from The Wall Street Journal that the acquisition would happen, CA Technologies’ stock jumped around 16 percent in extended trading, and Broadcom shares dropped about 5.5 percent.
Broadcom has had a tumultuous year, and this purchase is a bit of a departure from its recent acquisition strategy. According to the Wall Street Journal, the purchase will help to diversify its portfolio.
Most recently, it blamed the layoffs of 1,100 employees on its long-winded $5.9 billion acquisition of Brocade. It finally closed on the Brocade deal in November 2017 after being delayed multiple times by regulatory concerns. In order to make the deal happen, Broadcom moved its headquarters from Singapore to San Jose in April, changing its corporate structure.
Adding to its struggles, Broadcom attempted a hostile takeover bid of Qualcomm. But in March of this year, President Donald Trump blocked Broadcom’s $117 billion takeover bid of that company. Trump said the deal posed a national security risk to the United States.
CA Technologies has had its own business and strategic shifts in the recent months. In its most recent earnings call with investors in May, the company said it planned to cut 800 employees to shift the business to a subscription-based model. Traditionally, CA Technologies focused on legacy monitoring tools, but it said it wanted to push into more Software-as-a-Service (SaaS) technologies.