After months of rumors about potential buyers and a failed earlier attempt by Broadcom, the chipmaker said it reached a deal to buy Symantec’s enterprise security business and its name for $10.7 billion in cash.
The deal doesn’t include Symantec’s consumer security business, which will continue under the Norton LifeLock brand.
The Symantec acquisition will expand Broadcom’s infrastructure software portfolio, and it follows the chipmaker’s $18.9 billion CA Technologies purchase late last year. Broadcom bought that company in large part for its enterprise software business. It also paid $5.9 billion to acquire Brocade in late 2017.
“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,” said Hock Tan, Broadcom president and CEO, in a statement. “Symantec…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.”
Broadcom says the deal will drive more than $2 billion of incremental, run-rate revenues and about $1.3 billion in earnings including synergies between the two companies. It also expects to earn double-digit, cash-on-cash returns on its investment.
The acquisition is expected to close in the first quarter of Broadcom’s fiscal year 2020.
Symantec’s No Good, Very Bad YearsThe acquisition follows a rocky couple of years for Symantec, which has struggled to shift its business — or at least its reputation — from a legacy firewall vendor to an enterprise cloud security specialist.
The firm last year launched an internal investigation into its financial reporting (and a related SEC probe), announced plans to slash jobs as part of a broader restructuring, and lost a handful of top executives.
The vendor’s roller coaster continued this year. It managed to post fiscal third-quarter results that came in above expectations; acquired software-defined perimeter technology startup Luminate Security; and announced collaboration plans with cloud giants Amazon Web Services (AWS), Microsoft Azure, and IBM Cloud.
However, in early May, its CEO Greg Clark abruptly resigned following dismal fiscal fourth-quarter results, which included weak enterprise sales and disappointing forecasts for the first quarter and full 2020 fiscal year. Clark told investors that the move was tied to family considerations.
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