Broadcom In 'Advanced Talks' To Purchase Symantec: Report
Symantec's stock soared 22 percent or $4.90 to $27 in after-hours trading Tuesday, which is the highest the company's stock has traded since May 2018.
Broadcom is in 'advanced talks' to buy platform security giant Symantec as the chipmaker continues to diversify its portfolio, according to a Bloomberg report.
The San Jose, Calif.-based semiconductor manufacturer could reach an agreement to buy Mountain View, Calif.-based Symantec within weeks, Bloomberg reported, though no deal has been finalized and talks could fall through. Symantec is the world's largest pure-play cybersecurity vendor, with annual sales of more than $4.73 billion.
Symantec's stock soared 22 percent or $4.90 to $27 in after-hours trading Tuesday, which is the highest the company's stock has traded since May 2018. Broadcom's stock, meanwhile, fell five percent or $12.08 to $283.25 in after-hours trading Tuesday. Symantec declined to comment, while Broadcom didn’t immediately respond to a request for comment from CRN.
[Related: Symantec Breach Exposes Purported Client List, Passwords In Demo Lab: Report]
A Broadcom-Symantec deal would be the second marriage between a chipmaker and an anti-virus vendor this decade, coming eight years after Intel purchased top Symantec competitor McAfee for $7.7 billion. The anticipated synergies never materialized, and Intel ended up spinning off McAfee to private equity firm TPG in a 2016 sale that valued the business at $4.2 billion.
The talks with Symantec come 16 months after Broadcom dropped its $117 billion bid to buy rival chipmaker Qualcomm, which was scuttled after President Donald Trump blocked the deal due to national security concerns. Since then, Broadcom has officially relocated its headquarters from Singapore to California's Silicon Valley.
Broadcom has aggressively diversified its business in recent years, purchasing data center networking provider Brocade for $5.9 billion in December 2017 and IT software giant CA Technologies for $18.9 billion in November 2018. The company, however, unloaded most of its security-related assets last year when it sold CA-owned application security testing vendor Veracode to Thoma Bravo for $950 million.
Symantec has been rumored to be an acquisition target previously, with Reuters reporting in November 2018 that private equity giant Thoma Bravo had approached the company to express interest in a takeover. A month later, though, CNBC reported that Thoma Bravo was having discussions with Intel and McAfee majority owner TPG about purchasing a controlling stake in Symantec's top competitor.
A deal that gives Thoma Bravo a majority stake in McAfee would kill any talks Thoma Bravo has had with Symantec about buying the company, CNBC said in December.
The last 14 months have been tumultuous for Symantec, culminating in the sudden May 2019 resignation of company President, CEO, and Board Member Greg Clark from all roles effective immediately. Since then, Symantec has been led on an interim basis by former Novellus Systems Chairman and CEO Richard Hill.
Clark's departure continued the executive brain drain atop Symantec, with President and COO Michael Fey leaving in December to take the CEO position at Mesosphere and EVP and CFO Nicholas Noviello announcing plans to depart Symantec in January.
Bloomberg reported late last year that CMO Michael Williams and Brandon Rogers, senior vice president of the go-to-market team, had also left the company. Symantec declined to comment on that report.
Meanwhile, activist investor Starboard Value said in an August 2018 regulatory filing that it believed shares of Symantec were undervalued at the time of purchase, and that it hopes to change the makeup of Symantec's board to unlock more value. A month later, the company reached an agreement with Starboard to name three new independent members to the company's board of directors.
Symantec also announced in September that it had finished its internal probe into concerns raised by a former employee and deferred $12 million of revenue that had been recognized in the quarter ended March 2018. The probe identified certain behavior inconsistent with the company's code of conduct, and referred the matter to Symantec for appropriate action.
And in June, Guardian Australia reported that a February data breach at Symantec had given hackers access to account numbers, passwords, and a purported list of the company's prominent Australian clients. Symantec characterized the breach as a "minor incident" since it involved a self-enclosed demo lab that didn't host sensitive personal data and wasn't connected to the company's corporate network.