Broadcom to buy software company CA Technologies for 18.9 bln Dollars

Broadcom agrees to buy CA Technologies for $18.9 billion

The move come just months after United States president Donald Trump signed an executive order preventing Broadcom from acquiring U.S. chip giant Qualcomm, citing national security concerns.

"This transaction represents an important building block as we create one of the world's leading infrastructure technology companies", Tan said.

The deal values CA stock at about $44.50 per share, or a premium of about 20 percent to the closing price of CA common stock on July 11. They expect $4.18 earnings per share, up 12.06 % or $0.45 from last year's $3.73 per share.

Joele Frank, Steve Frankel and Andi Rose are working the deal. CA shares ended trading on Wednesday at $37.21, and rose 15.6 percent after hours.

Net net, Rolland reiterates a Positive (AKA Buy) rating on Broadcom shares, with a price target of $305, which implies an upside of 48% from current levels.

Broadcom said it would finance the deal with cash on hand and US$18 billion in debt financing that it said was "fully committed".

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The bigger issue will be Broadcom's ability to manage the diverse software portfolio of a company the size of CA. Boards of both companies have agreed to the deal, though it still needs to gain the approval from the anti-trust authorities in the US, EU and Japan.

Mike Gregoire, CEO of CA, explains: "We are excited to have reached this definitive agreement with Broadcom". Over the past two decades, the company has grown through an endless series of acquisitions, much like the new Broadcom, and its business now includes a software-as-a-service business and other cloud companies. CA is a mission-critical technology....

Broadcom, which was headquartered in Singapore at the time, stated it was planning to relocate to the order to allay those national security fears.

First National Bank of Hutchinson bought a new stake in Broadcom Inc (NASDAQ:AVGO) during the second quarter, according to the company in its most recent filing with the Securities and Exchange Commission (SEC). CA's position in the software industry is nowhere close to the criticality of Qualcomm in the chipset industry. The firm has a market cap of $106.92 billion, a P/E ratio of 17.52, a PEG ratio of 1.12 and a beta of 0.93.

As noted by the Journal, Bloomberg, TechCrunch, and the Register, the deal actually makes little sense, with the Journal euphemistically saying it "would take the chip-making giant in a new direction", TechCrunch calling it a "bit of a surprise", and the Register straight-up calling it the "Weirdest".

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