Broadcom, a leading company in the semiconductor industry, has confirmed its decision to buy the New York-based software firm CA Technologies. According to sources, Broadcom will pay $18.9 in cash for the acquisition that could help in branching out its services into the corporate software and computer security business.
For the record, buying CA Technologies would be the first significant move Broadcom will make after its failed attempt in March to take over Qualcomm for a sum of $117 billion. The deal was blocked by the U.S. government on grounds of security, as Broadcom was at the time headquartered in Singapore and handing it a major American chipmaker could strengthen China’s capabilities in the industry. Broadcom has since then shifted its headquarters to San Jose, California and is making efforts to diversify its business portfolio through multiple acquisitions.
Sources close to the matter revealed that Broadcom made the initial approach to CA Technologies few months ago and the boards of both companies finalized the deal on Wednesday. Industry analysts mentioned that this buyout does not seem to raise any alarms in the government that had instigated the obstruction of Broadcom’s proposal to purchase Qualcomm.
Reports suggested that Broadcom will offer $44.50 per share to the shareholders of CA Technologies – a 20% increase on their Wednesday closing price. Both the companies fared differently on the stock market post the announcement, with Broadcom’s shares plunging by around 6% and the shares for CA Technologies rising by over 16%.
Broadcom CEO Hock Tan has been quoted stating that this deal signifies a milestone in the company’s objective of creating a one of the world’s best infrastructure technology companies.
Mike Gregoire, the CEO at CA Technologies believes that this transaction will enable an alignment of their software expertise with Broadcom’s prominence in the semiconductor market.