Broadcom’s bid to buy the US software firm CA Technologies for $18.9bn has sent the chipmaker’s share price plummeting.
Hock Tan, Broadcom’s CEO, said the takeover represented an opportunity to build one of the world’s leading infrastructure technology companies.
But investors have cast doubt on whether CA will complement Broadcom’s existing hardware business. Broadcom shares fell 19 per cent on Thursday, marking the biggest drop the company has ever faced.
The move comes four months after Donald Trump blocked the chipmaker’s proposed takeover of its US rival Qualcomm. The deal was worth $140bn and would have been the biggest tech takeover in history.
But Trump halted the deal on the grounds of national security. Officials had feared Qualcomm’s 5G chip business might suffer under Broadcom ownership, giving an edge to Chinese rivals whose components US firms would come to depend on.
Broadcom responded by redomiciling to the US, allowing it to acquire American companies without facing scrutiny from the Committee on Foreign Investment in the United States.
“With its sizeable 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,” said Broadcom’s Tan. “We intend to continue to strengthen these franchises to meet the growing demand for infrastructure software solutions.”
“We are excited to have reached this definitive agreement with Broadcom,” added Mike Gregoire, CA Technologies’ CEO. “This combination aligns our expertise in software with Broadcom’s leadership in the semiconductor industry.