Chipmaer Broadcom is nearing a deal to buy US cyber security group Symantec in a transaction that could be worth more than $15bn, according to people briefed about the negotiations.
A deal could be announced as early as Wednesday, although those briefed on the talks warned that no final agreement had been signed and the announcement could be delayed until after the US public holiday on July 4.
Broadcom’s move to acquire Symantec signals that the acquisitive chipmaker is shifting its attention to buying up software assets, after it was blocked by US President Donald Trump from pursuing a bid for rival Qualcomm last year.
The US-based company run by Hock Tan, the arch-consolidator amid a wave of dealmaking in the global semiconductor industry, acquired CA Technologies for $18.9bn a year ago.
News of the potential acquisition, which was first reported by Bloomberg, sent Symantec’s shares up by more than 20 per cent in after-market trading on Tuesday, adding about $3bn to its stock market value. However, the news also wiped $5bn off Broadcom, which fell more than 4 per cent, reflecting Wall Street’s unease about the chipmaker’s sally into software.
Mr Tan bought his way to the top of the chip industry with a series of big deals and earned a reputation as one of the industry’s most effective operators. He has sought to persuade investors that he can bring those same skills to bear in consolidating the fragmented enterprise software industry.
Even at $15bn, a deal would value Symantec some $6bn below where it stood in late 2017, before it faced waning investor confidence over flagging growth. The security software company was also dented by news that claims from a whistleblower had prompted a board-level investigation into unspecified financial issues.
One of the pioneers of consumer antivirus software, Symantec has struggled to show it can expand into new corners of the security market to revive its fortunes.
The company has been through a succession of chief executives and spent $7bn on two acquisitions, of enterprise security company Blue Coat Systems and LifeLock, which protects against identity theft, in search of more sustained growth.
Its flagging growth and solid free cash flow, which topped $1bn last year, have attracted interest from prominent private equity firms. Activist hedge fund Starboard Value owns more than 5 per cent and has a board seat. Its directors also include Ken Hao, a partner at Silicon Valley private equity firm Silver Lake, who was a close ally of Mr Tan and helped build Broadcom before that company’s detour into software put the two in potential conflict.
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