Broadcom Buying Symantec’s Enterprise Business

Broadcom announced an agreement late Thursday to acquire the enterprise security business of Symantec for $10.7 billion in cash. With product lines across endpoint security, web security services, cloud security and data loss prevention, Symantec’s enterprise security business “will significantly expand Broadcom’s infrastructure software footprint,” said the company.

“M&A has played a central role in Broadcom’s growth strategy and this transaction represents the next logical step in our strategy,” Broadcom CEO Hock Tan said in a statement. “Symantec’s enterprise security business is recognized as an established leader in the growing enterprise security spacea nd has developed some of the world’s most powerful defense solutions that protect against today’s evolving threat landscape and secure data from endpoint to cloud.”

The transaction is expected to drive more than $2 billion of sustainable, incremental, run-rate revenues and approximately $1.3 billion of Pro Forma EBITDA, including synergies. It’s expected to generate more than $1 billion of run-rate cost synergies within 12 months following close. Additionally, Broadcom expects to achieve double-digit cash-on-cash returns on its investment.

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Broadcom intends to fund the transaction with proceeds from new committed debt financing.
Broadcom is known for acquiring companies. After years of primarily buying chip companies, it entered the software industry last year with its purchase of CA Technologies for almost $19 billion. Earlier in the week, The Wall Street Journal reported the two companies were close to a deal for Symantec’s enterprise security business. Symantec stock rose 12.3% on Thursday following the news report.

The transaction, which is expected to close in the first quarter of Broadcom’s fiscal year 20201, is subject to regulatory approvals in the U.S., EU and Japan and other customary closing conditions.