Buying CA at a premium of 20%, Broadcom shares fell 17%!

According to the micro-network news, on July 11th, the US local time, Broadcom announced that it will acquire CA Technologies, a US commercial software company, for US$18.9 billion in cash and a premium of 20%, which marks that Broadcom has begun to test the business outside the semiconductor industry.

After the announcement of a 20% premium to acquire CA, Broadcom's initial decline was reported at $201.08, down 17.4%, with a temporary turnover of $2.42 billion. The latest total market capitalization was $86.8 billion. CA is currently up 18%, 44 US dollar, the latest total market value is 18.5 billion US dollars.

Broadcom confirmed that it will acquire cloud software and enterprise software developer CA Technologies in cash at US$44.5 (approximately US$18.9 billion). The price is about 20% higher than CA's Wednesday closing price. Since then, Broadcom will expand to software. field.

It is understood that Broadcom mainly provides chips for smartphones, computers and network devices, and its share in the chip market is 30%. CA specializes in software for mainframes, software used by large servers that are gradually replaced by cloud computing, and the company has been Seeking expansion to commercial software.

The different business scope of the two companies means that Broadcom will benefit primarily from CA's recurring revenue rather than profit from operational synergies.

Although the acquisition of CA does not bring significant growth in performance, it can diversify Broadcom's business, expand its software business, and generate solid cash flow. Last year, CA's revenue reached US$4.2 billion and its operating cash flow reached 1.2 billion. Dollar.

Since the deal looks more like a financial investment than a complementary business, Wall Street is still surprised that Broadcom has taken CA as the target of the acquisition.

Interestingly, since the founding of Wang Jialian in the 1980s, CA's rapid development has also come from a series of mergers and acquisitions. The company's current main business is the production of cloud-based enterprise software and traditional software.

In addition, in order to raise the acquisition funds, Broadcom plans to issue $18 billion in new debt. From the current share price performance of Broadcom, the market does not recognize the acquisition.