Broadcom inks $19b deal to buy US firm CA

Broadcom Inc announced a $18.9 billion (Dh69.4 billion) deal to buy US business software company CA Inc on Wednesday, venturing far beyond its realm of semiconductors and testing investors’ confidence in its Chief Executive Hock Tan’s deal-making credentials.

The CA deal, outlined in a joint statement from the companies, comes just four months after US President Donald Trump blocked Broadcom’s $117 billion hostile bid for semiconductor peer Qualcomm Inc, arguing it posed a threat to US national security and gave an edge to Chinese companies looking to build next-generation wireless networks.

Since then, Broadcom has redomiciled from Singapore to the United States, placing it formally outside the purview of the Committee on Foreign Investment in the United States (CFIUS), the government panel that reviews deals for potential national security risks.

Deal-making has been key to Broadcom’s expansion, as it grew from a 4 per cent share of the chip market in 2013 to a 30 per cent share this year, thanks to acquisitions spearheaded by Tan with backing from private equity firm Silver Lake.

Tan’s selection of CA as Broadcom’s next acquisition target, however, took Wall Street by surprise, and drove Broadcom shares down 7 per cent in after-hours trading. Investors and analysts scrambled to identify potential synergies, as the deal looked more like a financial investment rather than a combination of complementary businesses.