Broadcom looks to buy security firm Symantec
Broadcom has set its sights on acquiring a wellknown name in cybersecurity software, in a further strategy shift after the Trump administration blocked it last year from purchasing another chipmaker on national security grounds.
The semiconductor giant is in advanced discussions to buy Symantec, which makes antivirus software and other products, two people briefed on the matter said Wednesday. Any deal would most likely value Symantec at more than $15 billion, they said. A transaction could be announced in the coming days, though the people warned that negotiations were still taking place and could fall apart.
A Symantec spokeswoman declined to comment, while a Broadcom representative did not immediately return a request for comment. The
talks were earlier reported by Bloomberg News.
If an agreement is reached, it will underline how much Broadcom has had to change its acquisition strategy after the humbling defeat of its $117 billion bid last year to buy Qualcomm, the world’s largest maker of wireless chips. The Trump administration said it was specifically concerned that a deal for Qualcomm, an American company, would cede the nation’s primacy in the semiconductor and wireless industry and allow China to vault over the United States in nextgeneration wireless networks.
Since then, Broadcom has moved to buy software businesses. Last year, it agreed to buy CA Technologies, a maker of corporate software, for nearly $19 billion. And Broadcom’s chief financial officer, Tom Krause, recently told Morgan Stanley that the company would focus on buying socalled infrastructure software that powers backend operations for businesses.
Broadcom, run by its highly acquisitive CEO, Hock Tan, was incorporated in Singapore for most of its history before announcing that it would move its headquarters to San Jose before its hostile takeover bid for Qualcomm.
Tan has said he likes to buy mature companies with large, entrenched franchises that generate stable flows of cash. He then spins off what he considers less attractive or speculative businesses, doubling down on the larger profitable segments. That approach was crystallized in 2015 when Tan’s company — then called Avago — bought Broadcom for $37 billion and assumed the Broadcom name. The combined company later sold several wireless chip units to Cypress Semiconductor of San Jose.
The first sign that Tan was open to buying nonsemiconductor businesses came in 2016 when Broadcom made a $5.5 billion deal to acquire Brocade, which makes computer networking hardware.
The software industry differs in some ways from semiconductor and other hardware businesses, starting with the lack of manufacturing and generally higher gross profit margins. But companies like CA and Symantec grew through their own acquisitions, accumulating assets that Tan could consider restructuring or selling.
Symantec, founded in 1982, has a wide range of products for safeguarding corporate computer networks. Its own recent acquisitions include a $2.3 billion deal in 2016 to buy LifeLock, which specializes in protecting consumers from identity theft.
Symantec’s most famous business over the years has been software for countering computer viruses that has been sold to consumers under the name of Peter Norton, a wellknown programmer who sold his company to Symantec. The company branched into other segments of the enterprise software market, including the $13.5 billion purchase of Veritas Software in 2005.
That deal was controversial on Wall Street, and Symantec wound up selling Veritas in 2016 to a group of investors led by the Carlyle Group for $7.4 billion. That same year, Symantec agreed to a $4.65 billion deal to buy Blue Coat, whose products included software that blocked a company’s employees from reaching dangerous websites.
Blue Coat’s CEO, Greg Clark, took the same post at Symantec. But Clark stepped down suddenly in May, triggering a sharp drop in Symantec’s share price. Richard Hill, an industry veteran who was named interim president and CEO, said in interviews that Clark’s move had been partly related to disappointing financial results.
The company is also being investigated by the Securities Exchange Commission for its auditing practices.
Symantec faces stiff competition, both from large companies like Cisco and fastgrowing startups such as Palo Alto Networks.
“Issues will likely be raised around Symantec’s competitive position, as well as the consumer exposure,” Stacy Rasgon of Sanford C. Bernstein wrote in a research note. “But, at the same time, there is undoubtedly good that better management can achieve here.”