Broadcom announced this week that it will acquire Symantec’s enterprise security business for $10.7 billion.
While speculation emerged over the acquisition in July, Broadcom only formally made the announcement this week.
The transaction is expected to close before the year ends and should help the company save costs.
The chip maker saw its shares rise 1% in-after-hours trading immediately following the announcement while shares of Symantec shares were halted after market close. They did see gains of as much as 5% after resuming trading.
According to Broadcom, the deal will result in more than $1 billion in run-rate cost synergies in the 12 months after the deal has closed, partly by eliminating redundancies. Broadcom said it will own and use Broadcom’s brand name after the deal closes.
Symantec said that it expects the deal to close before 2019 ends.
“There will be meaningful cross-selling opportunities with Brocade and CA solutions” as a result of the acquisition, Broadcom CEO Hock Tan said.
In its press release, the buyer stated that”[t]he addition of Symantec’s enterprise security portfolio will significantly expand Broadcom’s infrastructure software footprint as it continues to build one of the world’s leading infrastructure technology companies.”
“There is undoubtedly good that AVGO can do here; Symantec has been plagued by turnover, accounting restatements, & execution issues, and better more focused leadership could likely do it well,” Bernstein Research analysts led by Stacy Rasgon remarked before the deal was announced.
Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.