Broadcom may buy Symantec for $15-Billion Acquisition

As per the report Broadcom Inc, is in advanced talks to buy Symantec Corp,a 37-year-old security software vendor as Broadcom seeks to diversify beyond semiconductors. The deal would be likely to value Symantec at more than $15bn. If this deal is going through, then it would be the second major acquisition of a security software maker by a semiconductor company. The shares of Symantec surged 22% in after-hours trading, while Broadcom fell 4%. Symantec has saw, its share price increase to over $25 for the first time since last May.

Symantec makes money selling cyber-security products, solutions and services to corporates and retail customers. This deal would expand Broadcom’s push into software a year after its $18.9 billion deal to buy U.S. business software company CA Inc. As Broadcom’s failed bid to buy Qualcomm Inc. This will expand their portfolio to enterprise and consumer security.

Shares of Broadcom Inc fell 5.6% after it cut its full-year revenue forecast by $2 billion, blaming the U.S.-China trade worries and export curbs on Huawei Technologies Co Ltd. Other chip companies, which both source product and sell heavily in China, dropped sharply. The Philadelphia Semiconductor index tumbled 2.6%.

Symantec was an early leader in computer security but is facing growing competition. While all the companies into security and cyber security is booming in double digits, at the same time Symantec is struggling with the numbers, earnings and several other issues in recent years. In August 2018, Symantec cut its revenue forecast and revealed its plan to cut eight per cent of its staff worldwide.The news of Greg Clark, CEO, Symantec stepped down and Richard Hill, director, Symantec to take the charge as the interim president and CEO after the company missed its revenue estimates for the fourth quarter. Symantec's troubles have also hit its stock.

Hock Tan, CEO, Broadcom has built the company through a series of ambitious deals. As CEO of Avago, Tan pulled off the acquisition of Broadcom for $37 billion, bringing the two companies under the umbrella name of Broadcom. If this deal is going through (Broadcom-Symantec) it will would be the second major acquisition of a cybersecurity provider by a chipmaker.Broadcom needs software because its semiconductor business is hurting.

Now a question is on why  Symantec will agree to the deal, Broadcom would acquire a company that’s currently valued at $15.5 billion (after reported talks pushed the stock up 14% on Wednesday) on $4.7 billion in annual revenue. Combining Symantec with CA, software would account for 37% of Broadcom’s total revenue.If the Symantec deal doesn’t get done, Broadcom has also been working on a deal to acquire an infrastructure software company and has considered Tibco, infrastructure software company .