Semiconductor Supplier Broadcom to Acquire CA Technologies for $18.9 Billion in Cash

• Builds One of the World’s Leading Infrastructure Technology Companies
• Continues Broadcom’s Focus on Acquiring Established Mission Critical Technology Businesses
• Expands Broadcom’s TAM to Include Growing and Fragmented Infrastructure Software Market
• Provides Broadcom with Significant Recurring Revenue
• Expected to Drive Broadcom’s Long-Term Adjusted EBITDA Margins Above 55% and be Immediately Accretive to Broadcom’s Non-GAAP EPS
• Expected to Enable Broadcom to Sustain Double-Digit EPS CAG
• Expected to Close in Fourth Calendar Quarter of 2018

Broadcom Inc. and CA Technologies, provider of information technology (IT) management software and solutions, announced that the companies have entered into a definitive agreement under which Broadcom has agreed to acquire CA to build a leading infrastructure technology company.

Under the terms of the agreement, which has been approved by the boards of directors of both companies, CA’s shareholders will receive $44.50 per share in cash. This represents a premium of approximately 20% to the closing price of CA common stock on July 11, 2018, the last trading day prior to the transaction announcement, and a premium of approximately 23% to CA’s volume-weighted average price for the last 30 trading days.

The all-cash transaction represents an equity value of approximately $18.9 billion, and an enterprise value of approximately $18.4 billion.

Hock Tan, president and CEO, Broadcom, said: “This transaction represents an important building block as we create one of the world’s leading infrastructure technology companies. 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. 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,” said Mike Gregoire, CA Technologies CEO. “This combination aligns our expertise in software with Broadcom’s leadership in the semiconductor industry. The benefits of this agreement extend to our shareholders who will receive a significant and immediate premium for their shares, as well as our employees who will join an organization that shares our values of innovation, collaboration and engineering excellence. We look forward to completing the transaction and ensuring a smooth transition.”

The transaction is expected to drive Broadcom’s long-term Adjusted EBITDA margins above 55% and be immediately accretive to its non-GAAP EPS. On a combined basis, it expects to have last twelve months non-GAAP revenues of approximately $23.9 billion and last twelve months non-GAAP Adjusted EBITDA of approximately $11.6 billion.

In mainframe and enterprise software, CA’s solutions help organizations of all sizes develop, manage, and secure complex IT environments that increase productivity and enhance competitiveness. CA leverages its learnings and development expertise across its mainframe and enterprise solutions businesses, resulting in cross enterprise, multi-platform support for customers. The majority of CA’s largest customers transact with CA across both its mainframe and enterprise solutions portfolios. CA benefits from predictable and recurring revenues with the average duration of bookings exceeding three years. CA operates across 40 countries and currently holds more than 1,500 patents worldwide, with more than 950 patents pending.  

Financing and Path to Completion
Broadcom intends to fund the transaction with cash on hand and $18.0 billion in new, fully-committed debt financing. It expects to maintain an investment grade rating, given its strong cash flow generation and intention to rapidly de-leverage.

The transaction is subject to customary closing conditions, including the approval of CA shareholders and antitrust approvals in the U.S., the EU and Japan.

Careal Property Group AG and affiliates, who collectively own approximately 25% of the outstanding shares of CA common stock, have entered into a voting agreement to vote in favor of the transaction.  

The closing of the transaction is expected to occur in the fourth calendar quarter of 2018.