Data center and networking infrastructure vendor Broadcom (NASDAQ: AVGO) has acquired the enterprise security business of Symantec Corporation (NASDAQ: SYMC) for $10.7 billion in cash. This would significantly expand Broadcom’s infrastructure software footprint with integrated enterprise cybersecurity solutions.
With product lines across endpoint security, web security services, cloud security and data loss prevention, Symantec’s enterprise security business offers its customers a “best-in-class” suite of integrated enterprise security solutions.
Broadcom will pay Symantec $10.7 billion in cash at closing. Broadcom intends to fund the transaction with proceeds from new committed debt financing.
The transaction, which is expected to close in the first quarter of Broadcom’s fiscal year 2020, is subject to regulatory approvals in the U.S., EU and Japan and other customary closing conditions. Following the closing of the transaction, Broadcom will own and incorporate the Symantec brand name into the Broadcom portfolio.
Enterprise Security Solutions
“M&A has played a central role in Broadcom’s growth strategy and this transaction represents the next logical step in our strategy following our acquisitions of Brocade and CA Technologies,” said Hock Tan, President and Chief Executive Officer of Broadcom. “Symantec’s enterprise security business is recognized as an established leader in the growing enterprise security space and 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. We look forward to expanding our footprint of mission critical infrastructure software within our core Global 2000 customer base.”
Deploying Symantec’s enterprise security suite through Broadcom’s channels would strengthen its differentiated portfolio license agreement (PLA) strategy of offering significant overall savings to customers, while creating a predictable, recurring revenue stream for its business that will drive returns for shareholders.
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. The transaction is 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.