Chipmaker Broadcom is buying cybersecurity specialist Symantec Corporation’s enterprise security business for $10.7 billion in cash, the companies announced Thursday.
The deal signals Broadcom’s continued efforts to diversify beyond its main memory-chip business. Symantec is America’s largest cybersecurity company. Its anti-virus software helps companies thwart cyber threats across their physical devices and in the cloud.
Previously, Broadcom acquired network equipment maker Brocade in 2017 and enterprise security company CA Technologies in 2018. The company said following the Symantec acquisition in the first quarter of 2020, it expects 29% of its total revenue to come from software, up from a projected 22% in 2019.
Broadcom aims to “build one of the world’s leading infrastructure technology companies across hardware and software,” CEO Hock Tan said on a call with analysts on Thursday.
The proposed acquisition is still subject to antitrust approval. And it comes just over a year after Broadcom’s $117 billion bid for rival Qualcomm (QCOM) was blocked by President Donald Trump over national security concerns.
The Trump administration argued that the proposed takeover would cause Qualcomm to fall behind in next-generation 5G technology, allowing competitors such as China’s Huawei to gain an edge. It was concerned that Broadcom’s plan to borrow $100 billion for the deal meant it would have had to squeeze cash out of Qualcomm, leaving less money for 5G research and development.
But unlike that deal, the Symantec aquisition will not require approval from the Committee on Foreign Investment in the United States, which was involved in blocking the Qualcomm deal, because Broadcom moved its headquarters from Singapore to San Jose, Calif. in April 2018.
Symantec’s consumer business will remain separate and be rebranded.
Symantec’s shares were up nearly 3% in after hours trading Wednesday. Broadcom’s were up less than half a percent.
Broadcom Inc (AVGO), headquartered in San Jose, California, is one of several companies that have taken a hit from an escalating US campaign against Huawei.
Washington has urged its allies to keep the Huawei’s telecom equipment out of their 5G networks, and in May banned US companies from selling it components without a license. Trump announced on June 29 that he would relax the ban but it is not yet known what impact that will have.
“It is clear that the US-China trade conflict including the Huawei export ban is creating economic and political uncertainty and reducing visibility for global customers,” Broadcom’s Tan said in an earnings call last month, after the company missed analyst expectations for the first quarter of 2019 and slashed its full year revenue outlook by $2 billion.