Acquisition of CA Technologies by Broadcom for $18.9bn
It has been announced that Broadcom and CA Technologies, have entered into a definitive agreement for the acquisition of CA by Broadcome to build an infrastructure technology company.
Under the terms of the agreement, CA’s shareholders will receive $44.50 per share in cash. This represents a premium of approximately 20% to the closing price of CA common stock on July 11, 2018. The acquisition is all cash and represents an equity value of approximately $18.9bn, and an enterprise value of approximately $18.4bn.
Hock Tan, President and Chief Executive Officer of Broadcom, said: “This transaction represents an important building block as we create one of the world’s leading infrastructure technology companies. With its sizable installed base of customers, CA is uniquely positioned across the growing and fragmented infrastructure software market, and its mainframe and enterprise software franchises will add to our portfolio of mission critical technology businesses. We intend to continue to strengthen these franchises to meet the growing demand for infrastructure software solutions.”
Mike Gregoire, CA Technologies Chief Executive Officer, stated: “We are excited to have reached this definitive agreement with Broadcom. This combination aligns our expertise in software with Broadcom’s leadership in the semiconductor industry. The benefits of this agreement extend to our shareholders who will receive a significant and immediate premium for their shares, as well as our employees who will join an organization that shares our values of innovation, collaboration and engineering excellence. We look forward to completing the transaction and ensuring a smooth transition.”
The transaction is expected to drive Broadcom’s long-term Adjusted EBITDA margins above 55% and be immediately accretive to Broadcom’s non-GAAP EPS. On a combined basis, Broadcom expects to have last twelve months non-GAAP revenues of approximately $23.9bn and last twelve months non-GAAP Adjusted EBITDA of approximately $11.6bn.
Financing and the path to acquisition completion
Broadcom intends to fund the acquisition with cash on hand and $18bn in new, fully committed debt financing. The transaction is subject to customary closing conditions, including the approval of CA shareholders and antitrust approvals in the U.S., the EU and Japan.
Careal Property Group AG and affiliates, who collectively own approximately 25% of the outstanding shares of CA common stock, have entered into a voting agreement to vote in favor of the transaction.
The closing of the transaction is expected to occur in the fourth calendar quarter of 2018.