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Business Deals

Broadcom to buy US software firm for $19bn

CA Technology deal still requires green light from Washington

Chipmaker Broadcom will jump into software with the acquisition of U.S. developer CA Technologies.   © Reuters

PALO ALTO, U.S. -- Semiconductor heavyweight Broadcom will buy U.S. software developer CA Technologies for $18.9 billion, reaching beyond its stronghold of communications chips after Washington blocked the company's bid for rival Qualcomm earlier this year.

The all-cash deal announced Wednesday represents Broadcom's first in the software field and serves as "an important building block as we create one of the world's leading infrastructure technology companies," President and CEO Hock Tan said. The company gains rich expertise in software used to develop enterprise information technology systems, including over 1,500 patents. Broadcom's traditional strengths include chips used in Wi-Fi and broadband network systems.

When the transaction is complete, roughly 30% of Broadcom's revenue should come from software, based on CA's $4.24 billion in revenue for the year ended in March.

The acquisition also is Broadcom's first since the U.S. government in March blocked its $117 billion bid for chipmaker Qualcomm, citing national security concerns. Broadcom has since moved its headquarters from Singapore to San Jose, California, becoming an American company. But the firm's deep ties to China's tech sector, including telecommunications equipment maker Huawei Technologies, continue to draw concern.

CA, unlike Qualcomm before it, assented to Broadcom's acquisition. But the deal still faces antitrust screening in the U.S., European Union and Japan, where CA has operated a local unit since the 1990s to serve clients including NTT Docomo and KDDI. Though Broadcom expects the deal to close in the final quarter of 2018, the escalating trade war between the U.S. and China could pose an obstacle to regulatory approval.

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