Semiconductor company Broadcom plans to buy CA Technologies, a provider of IT management software and solutions, for $18.9 billion in cash. News of the deal wiped $19 billion off Broadcom’s market capitalisation.
Longtime followers of CA will not miss the irony of one of the IT industry’s most rapacious carnivores finally being swallowed itself.
And let’s not forget, that for a time, CA was also one of the industry’s most crooked operators.
Once known as Computer Associates it rebranded as CA Technology in an attempt to leave the scandals of the early 21st century behind it.
Just how bad was it? A 2007 report from CA’s own board stated: “Fraud was embedded in CA’s culture.”
The company found itself in trouble in the early 2000s over its accounting practices. A securities fraud investigation resulted in charges against the company and several of its senior executives, resulting in jail time for its then-CEO and chairman as well as its former Australia MD. In 2007 the company’s board released a report which stated, “Fraud pervaded the entire CA organisation at every level, and was embedded in CA’s culture,” The New York Times reported at the time.
Under the terms of the Broadcom agreement, which has been approved by the boards of directors of both companies, CA’s shareholders will receive $44.50 per share in cash, a 20 per cent premium on its closing price on July 11.
The transaction is expected to close in the fourth calendar quarter of 2018 and will diversify Broadcom’s business.
Last year Broadcom tried to acquire rival Qualcomm for $117 billion, but the takeover was abandoned after being blocked by the US government, which cited national security concerns.
A spokesperson for 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.”
A spokesperson for CA said: “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 organisation that shares our values of innovation, collaboration and engineering excellence. We look forward to completing the transaction and ensuring a smooth transition.”