Broadcom not blowing away investors
Semiconductor manufacturer Broadcom announced its acquisition of software firm CA Technologies for $19 billion.
The deal will expand the horizons of a company that focuses solely on semiconductors – now, Broadcom will have access to software for computers. Broadcom plans on financing the hefty deal through cash and refinanced debt.
Although this may seem like a big acquisition because of the sheer value, investors have been critical of it thus far. Broadcom shares fell 7 percent after the deal was announced, as investors do not know how the two companies will work together or what value CA Technologies will add to the company.
Broadcom CEO Hock Tan believes that the acquisition of CA will allow them to sell software to IT firms across the globe. He states,
This transaction represents an important building block as we create one of the world’s leading infrastructure technology companies. With its sizeable installed base of customers, CA is uniquely positioned across the growing and fragmented infrastructure software market, and its mainframe and enterprise software franchises will add to our portfolio of mission critical technology businesses.
Back in March, Broadcom attempted to acquire semiconductor competitor Qualcomm for $117 billion, but President Trump vetoed the deal. Further, Trump believed that the merger would create national security risks.
However, this will likely not stop Broadcom from trying again – they recently relocated to the US so that the country could keep a closer eye on them. Surely, this is a tactical move to regain the Trump administration’s trust and alleviate any concerns that the merger would pose any national security risks.
Featured image via Flickr/Florian Knodt