- Broadcom and Symantec agreed on a new kind of deal, concerning the vital security assets of the latter.
- Broadcom has now bought the specific sector that they were interested in, profoundly strengthening their portfolio.
- Symantec will now sell the remaining assets and focus on their consumer products.
Broadcom Inc. and Symantec Corporation have finally found a way out of the negotiations deadlock that they fell in about a month ago. Initially, Broadcom wanted to buy Symantec as a whole, furthering their software investment plan that would strengthen the chipmaker’s position in the broader tech market. With the deal going public, Symantec thought they could strike a better deal based on their potential and not their current value, but Broadcom denied to chase a moving target and rejected the proposed terms. In fact, Broadcom’s shareholders agreed with this move, as buying the turbulent Symantec wasn’t exactly music to their ears in the first place.
As it is reported now, the two have reached a new agreement that takes Symantec’s enterprise security assets to Broadcom for $10.7 billion. The deal will go through by the end of the year, as there are regulatory approvals that are still pending for Symantec. Remember, the company has had trouble with bashing financial investigations is still headless, and was already going through a transition phase on all levels. Still, the expertise of Symantec is on cybersecurity, and this is precisely what Broadcom eagerly wanted to add to their portfolio, perfectly complementing the 2017 acquisition of network equipment expert Brocade.
The remaining assets of Symantec, including their properties, will be monetized. Here’s what interim president, Rick Hill had to say about the deal with Broadcom: “With a large and growing market, Norton LifeLock products address consumers’ increasing need for cyber safety. In the first quarter of the fiscal year 2020, our Consumer Cyber Safety segment contributed 90% of Symantec’s total company operating income. It is our view that with an operating model focused on increased marketing investments and product development for consumer privacy, we can simultaneously grow our subscriber base and increase our annual revenue per user. We expect this asset divestiture will enable our Norton LifeLock business to grow revenue in the mid-single digits, with continued strong cash flow from operations and expanded earnings growth.”
So, Symantec shareholders will receive a special dividend of $12 per share after the transaction goes through, and the company will get heavily restructured to focus on consumer security solutions. The share price went up from $17.4 to $26, but Symantec’s shareholders are not the only ones who are happy with the deal. Broadcom’s shares also went up (from $266 to $275), as investors think of the new deal as a much more targeted and efficient one than what the chipmaker was initially going for.