Date
20 July 2018
Broadcom will finance the deal with cash on hand and US$18 billion in debt financing. Photo: Bloomberg
Broadcom will finance the deal with cash on hand and US$18 billion in debt financing. Photo: Bloomberg

Broadcom agrees to buy CA Technologies for US$18.9 billion

Broadcom Inc. has agreed to acquire US business software company CA Technologies for US$18.9 billion in a bid to diversify beyond semiconductors, Reuters reports.

The deal announced on Wednesday would come just four months after US President Donald Trump blocked Broadcom’s US$117 billion hostile bid for semiconductor peer Qualcomm Inc. on the ground that it posed a threat to US national security and potentially erode America’s lead in mobile technology.

Since then, Broadcom has redomiciled from Singapore to the United States, placing it formally outside the purview of the Committee on Foreign Investment in the United States (CFIUS), the government panel that reviews deals for potential national security risks.

Broadcom and CA announced the deal on Wednesday evening and said it would value CA at US$44.50 per share. 

CA, formerly known as Computer Associates, has its roots in providing software for mainframe computers used by banks and other large institutions. It has been shifting much of its business to the cloud to become more competitive with corporate customers.

The boards of both firms approved the deal agreement, the companies said. CA’s largest shareholders, Careal Property Group AG and affiliates, which own 25 percent of the outstanding shares of CA, have agreed to vote for the deal, according to the announcement.

Broadcom said it would finance the deal with cash on hand and US$18 billion in debt financing that it said was “fully committed”.

Broadcom under chief executive Hock Tan has been on an acquisition spree as some of its major customers such as Apple Inc. and Samsung Electronics Co. Ltd. look to consolidate supplier relationships and slash costs.

“This transaction represents an important building block as we create one of the world’s leading infrastructure technology companies,” Tan said in the announcement.

“We intend to continue to strengthen [CA’s software] franchises to meet the growing demand for infrastructure software solutions.”

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RC/CG

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