Disclaimer: We may earn a commission if you make any purchase by clicking our links. Please see our detailed guide here.

Follow us on:

Google News

Broadcom Sealed a Deal of $18.9 to Buy CA Inc

Bipasha Mandal
Bipasha Mandal
Bipasha Mondal is writer at TechGenyz

Join the Opinion Leaders Network

Join the Techgenyz Opinion Leaders Network today and become part of a vibrant community of change-makers. Together, we can create a brighter future by shaping opinions, driving conversations, and transforming ideas into reality.

Broadcom Inc announced a deal of $18.9 billion to buy CA Inc on Wednesday. The chipmaker is looking to venture far beyond its realm of semiconductors. Broadcom’s chips power smartphones, computers, and the like, whereas CA specializes in software, and they had been looking to expand their business. CA Technologies CEO Mike Gregoire to has been looking for a deal for some time.

Broadcom’s main business is becoming more competitive as major customers like Apple and Samsung look to consolidate supplier relationships and slash costs. This led to the pursuit of Qualcomm by Broadcom. Just four months back, US President Donald Trump blocked Broadcom’s $117 billion bid for Qualcomm Inc, stating that the company posed a security threat to the country. Since then, Broadcom has redomiciled from Singapore to the US which conveniently put them outside the purview of the Committee on Foreign Investment in the US.

The new deal looks like a financial investment on Broadcom’s part and their acquisition of CA brought Broadcom shares down by 7%. RBC Capital Markets analyst Amit Daryanani wrote, “Investors will wrestle and try to gain comfort in (the) strategic rationale and its impact to capital allocation.” Broadcom will definitely benefit primarily from CA’s recurring revenue. Last year, Broadcom acquired Brocade Communications Systems for $5.5 billion.

The mainframes provided by Brocade is more or less same as CA’s but the Chief Financial Officer of Broadcom, Tom Krause defended the deal by pointing to the experience the company already has in selling networking gear to big business operating data centers.

What we do is buy mission-critical technology businesses. CA is a mission-critical technology. … We’ve been pretty impressed not only with (CA’s) management, but also the team that CA has built around these core franchises that we value. – Tom Krause, Chief Financial Officer Broadcom

Analyst Kinngai Chan of Summit Insights Group said, “We believe this planned acquisition definitely will create some uneasiness amongst its current investor base.”

Broadcom will pay $44.50 per share in cash for CA. As of May 6, Broadcom’s debt stood at $17.5 billion.


Partner With Us

Digital advertising offers a way for your business to reach out and make much-needed connections with your audience in a meaningful way. Advertising on Techgenyz will help you build brand awareness, increase website traffic, generate qualified leads, and grow your business.

Power Your Business

Solutions you need to super charge your business and drive growth

More from this topic