(Reuters) – Chipmaker Broadcom Inc (AVGO.O) will buy Symantec Corp’s (SYMC.O) enterprise security business for $10.7 billion in cash, the antivirus software maker said on Thursday, as it tries to scale up its software business through deals.
FILE PHOTO: A sign to the campus offices of chip maker Broadcom Ltd is shown in Irvine, California, U.S., November 6, 2017. REUTERS/Mike Blake/File Photo
The chipmaker bought U.S. business software maker CA Inc for $18.9 billion and was reportedly in talks to buy infrastructure software company Tibco Software Inc, which was taken private by Vista Equity Partners for $4.3 billion in 2014.
Its push to software came after a failed attempt last year to buy mobile chipmaker Qualcomm Inc (QCOM.O) for $117 billion, which was scuttled by the Trump administration, citing national security.
“M&A has played a central role in Broadcom’s growth strategy and this transaction represents the next logical step in our strategy,” Broadcom Chief Executive Officer Hock Tan said.
Broadcom said the Symantec deal is expected to close in the first quarter of its fiscal year 2020 and is subject to regulatory approvals in the United States, European Union and Japan.
Symantec has been struggling with severe competition from nimbler rivals. Several top executives, including CEO Greg Clark, have left the company this year, while it is also being investigated by U.S. regulators over an accounting irregularity.
Symantec, which reported better-than-expected results on Thursday, said it plans to cut the global workforce by about 7% and take a charge of about $100 million. It employed more than 11,900 people as of March 29.
Revenue from Symantec’s enterprise security unit, which is being sold to Broadcom, rose 9.9% to $611 million. Analysts on average had expected $564.3 million.
The company posted a net income of $26 million, or 4 cents per share, in the first quarter ended July 5, compared with a loss of $60 million, or 10 cents per share, a year earlier.
On an adjusted basis, the company earned 43 cents per share, above estimates of 33 cents per share, according to IBES data from Refinitiv.
Reporting by Supantha Mukherjee and Munsif Vengattil in Bengaluru; Editing by Arun Koyyur