Broadcom has lined up financing to acquire Symantec. The all-cash deal would value Symantec for roughly $22 billion including debt, according to Bloomberg.
Updated August 7, 2019: Broadcom and Symantec resume M&A negotiations
Original report from July 8, 2019 continues below:
Moreover, the chip giant has identified about $1.5 billion cost savings steps it could make at the cybersecurity company, Bloomberg says. That likely means Symantec's team could face job cuts, layoffs or potential business spin-offs, ChannelE2E believes.
Symantec's stock (SYMC) jumped about 19 percent last week amid the rumors, giving the company a $14.1 billion valuation at the time, according to Yahoo Finance. ChannelE2E has reached out to both companies for comment, but we have not independently confirmed the report.
Broadcom Acquiring Symantec? Potential Deal Timing
If a deal is coming, it's a safe bet Symantec wants to nail down buyout and valuation details ahead of the cybersecurity software company's next quarterly earnings call with Wall Street. That call is scheduled for August 1, 2019, according to Nasdaq. Bloomberg says the M&A deal could be announced by mid-July, if the two companies actually agree to terms with one another.
The potential deal makes sense on paper. Broadcom is known for acquiring struggling or slow-growth enterprise technology businesses, stripping out costs, and boosting profitability. One example involves the $18.9 billion buyout of CA Technologies, which initially triggered concerns on Wall Street but ultimately performed well.
Among Broadcom's secret to M&A success: Clearly communicating staff reduction plans to acquired businesses, investors and associated end-customers. Layoffs are never easy, but Broadcom is known for swift M&A staff cuts that include reasonable severance packages for employees -- rather than long, drawn out, torturous headcount reductions.
Broadcom Acquiring Symantec?: Key Cybersecurity Business Challenges
Symantec, meanwhile, has struggled on multiple fronts in recent years. Former CEO Greg Clark resigned in May 2019 amid weak enterprise cybersecurity software revenues. Executive team departures over the past year have also included Symantec's CFO, chief operating officer, chief marketing officer and the head of its go-to-market teams, Silicon Valley Business Journal noted in May. Board member Rick Hill has been interim president and CEO of the company since that time.
Among Symantec's challenges: The company was late to cloud- and mobile-centric cybersecurity services, and also faces intense competition from next-generation endpoint protection providers.
Among the rivals to watch: CrowdStrike recently completed a very successful IPO. Fast-growth startups such as AlienVault and Cylance both got acquired ahead of potential IPO pursuits. AT&T and BlackBerry, respectively, snapped up those companies in 2018. Folks are also watching Carbon Black and Cybereason for ongoing clues about the cyber market’s overall health.
Broadcom Acquiring Symantec?: MSSP Bright Spot
Bright spots for Symantec include the company's managed security services provider business, which ranks among the world's Top 100 MSSPs.
Rumors about the potential Broadcom-Symantec deal surface roughly one month before the massive Black Hat USA 2019 cybersecurity conference in Las Vegas.
Original story published July 3, 2019. Article updated July 8, 2019 with potential deal valuation and cost cut targets.
