Broadcom acquires Symantec's enterprise business
Broadcom acquires Symantec’s enterprise division for $10.7 billion in cash , according to a statement. This will scale up its software business through deals, with this acquisition it would accelerate Broadcom’s enterprise security business , which delivers more than $2 billion in annual revenue.
Symantec’s enterprise security unit offers a mix of security products and services to business and government customers, helping them improve their security, while reducing cost and complexity. Now onwards, Symantec, will be left with only consumer focused Norton LifeLock business. With this announcement the shares of Symantec rose 3.6% and Broadcom 2% in extended trading.
Broadcom said its expects the combination to result in more than $1 billion in run-rate cost synergies in the 12 months after the deal has closed, partly by eliminating redundancies. Broadcom said it will own and use Broadcom’s brand name after the deal closes.
Symantec said in a statement that it expects the deal close before the end of 2019. It plans to return of the proceeds of the deal after tax to investors as a $12-per-share special dividend after the deal closes. The company also intends to increase its dividend to 12.5 cents per share after the close.
M&A has played a central role in Broadcom’s growth strategy and this transaction represents the next logical step in our strategy,” Broadcom Chief Executive Officer Hock Tan said. This Broadcom and Symantec deal is expected to close in the first quarter of its fiscal year 2020 and is subject to regulatory approvals in the United States, European Union and Japan. It plans to raise fresh debt to fund the deal.
Symantec has been struggling with severe competition from various players into security and the smart start-up and sources said, the deal to sell entire company to Broadcom, didn’t workout over price negotiation. The next step is said, Symantec will have to do the haircut in the workforce by about 7% to 8%.
Broadcom last year acquired mainframe software company CA(one of the world’s leading providers of information technology (IT) management software and solutions) by paying almost $19 billion. The CA deal has helped Broadcom diversify its business. With this acquisition, there will be meaningful cross-selling opportunities with Brocade and CA solutions” as a result of the acquisition, says Broadcom CEO Hock Tan.
Post-acquisition, Broadcom could scale up , with the Symantec enterprise business which produces $2.3 billion in revenue in the 2019 fiscal year, or about half of the company’s total revenue. The segment sells software to help companies and governments detect attacks across devices and monitor the use of cloud services, among other things, will give a stiff competitions to the vendors including Cisco, Microsoft, Palo Alto Networks and Crowdstrike.
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