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July 11, 2018
martinwolf  Transaction Analysis
Broadcom Nears Deal to Acquire CA Technologies for Nearly $19B

Financial Information*
  • Enterprise Value                                        ~$18.9B
  • EV/LTM Revenue                                         4.5x
  • EV/LTM EBITDA                                           12.4x
Transaction Facts
  • According to sources cited by the Wall Street Journal and Bloomberg, semiconductor giant Broadcom (Nasdaq: AVGO) is acquiring software vendor CA Technologies (Nasdaq: CA) for $44.50 per share -- or a total of nearly $19B. The deal could be announced as early as later today.
  • CA Technologies stock soared more than 16 percent in after-hours trading following the news, while Broadcom shares fell about 5 percent during the same time.
A New Direction
  • Moving Forward: After President Trump blocked Broadcom's efforts to acquire Qualcomm in a $103B hostile takeover just four months ago, the $108B giant wasted no time in expanding its acquisition list and paving the path for smoother acquisitions in the future. Moving its corporate headquarters from Singapore to the US (San Jose, California) this year should exempt it from needing approval from the Committee on Foreign Investment in the United States (Cfius), the inter-agency government that blocked its earlier bid. 
  • Changing Strategy: Broadcom, which is down more than 5 percent year-to-date, could help diversify its assets through the CA deal by adding cloud-based and traditional enterprise software capabilities. The company has usually stuck to purchases in the semiconductor space in the past, but it's expanding to include newer offerings, as exemplified by its acquisition of Brocade Communications for $5.9B last November. 
For more information about this transaction,  click here to read the report.

*Financial information from the press release.

martinwolf was not the advisor in this transaction.

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Headquartered in Scottsdale, Arizona with offices in the San Francisco Bay Area and New York, martinwolf is a leading M&A Advisory focused on middle market companies in the IT Services, IT Supply Chain, IT-Enabled Business Process Outsourcing and Software as a Service (SaaS) space. Since 1997, our team has completed more than 155 transactions in over 20 countries and sold seven divisions of Fortune 500 companies. 

 

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