Market Overview

Symantec Shares Are Flying On Report Broadcom Is Eyeing A Takeover

Symantec Shares Are Flying On Report Broadcom Is Eyeing A Takeover

Broadcom Inc (NASDAQ: AVGO) is reportedly eyeing an acquisition of cybersecurity company Symantec Corporation (NASDAQ: SYMC), sources told Bloomberg.

Broadcom is potentially looking to buy Symantec to gain exposure to the more profitable software business, according to Bloomberg. Morgan Stanley analyst Craig Hettenbach told the publication Broadcom's strategy over the years to generate "high cash on cash returns" through acquisition has been successful. However, further acquisitions in the semiconductor sector is "much lower today" after a period of consolidation.

Why It's Important

If reports are accurate, Broadcom's acquisition of Symantec would mark its "most ambitious deal yet," said Bloomberg Intelligence's technology analyst Anand Srinivasan. Under its control, Broadcom CEO Hock Tan would need to "aggressively" trim Symantec's costs and keep sales stable at a time when it is losing market share.

Harsh Kumar, a Piper Jaffray analyst, was quoted by Bloomberg as saying Symantec would "make a perfect fit" for Broadcom's portfolio. The potential deal is similar to Broadcom's CA Technologies acquisition, which "ultimately turned out to be extremely successful" under Broadcom's control.

A deal could come in the coming weeks, although there is no guarantee a deal would finalize as talks could break down.

Shares of Symantec were trading higher by more than 15% to $25.46 early Wednesday morning, while Broadcom's stock lost around 4% following the merger report.

Related Links:

Baird: Broadcom Lowers Full-Year Revenue Outlook On High Channel Inventory

Analysts: Broadcom's Reduced Outlook Due More To Caution Than Broader Weakness

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