Broadcom has agreed to acquire the enterprise security business of Symantec for USD 10.7 billion cash. This gives the company rights to the Symantec brand name and a full range of cybersecurity products for the business market. Symantec will continue with its consumer software business under the Norton name.
After the takeovers of Brocade and CA Technologies, the deal expands Broadcom's portfolio into another new business line, with products in endpoint security, web security services, cloud security and data loss prevention. Broadcom plans to expand Symantec's distribution through its channels, building on its portfolio license strategy of offering savings to customers taking multiple products and increasing its recurring revenue streams.
Broadcom expects over USD 2 billion in annual synergies from the takeover and USD 1.3 billion in pro forma EBITDA including the synergies. At least USD 1 billion in cost synergies should be realised within 12 months of closing the deal.
Broadcom has agreed new debt financing to pay for the takeover. The company said the deal would not affect its policy of paying out 50 percent of free cash flow as dividends. However, any excess cash going forward will go to paying down debt, rather than share buybacks, in order to maintain its investment grade credit rating.
The takeover is expected to close in Broadcom's fiscal first quarter, pending regulatory approvals in the US, EU and Japan.
Broadcom was earlier reported to be in talks on acquiring all of Symantec, but the companies supposedly could not agree on a price. Symantec plans to use the proceeds of the sale to pay a special dividend of USD 12 per share.
