Broadcom → CA Technologies
Broadcom's $18.9bn cash purchase of CA Technologies, agreed four months after its Qualcomm bid was blocked, sent Broadcom's shares to their biggest fall on record — and set the course for the larger software purchases that followed, Symantec's enterprise business and VMware.
An all-cash purchase at $44.50 a share that took the chipmaker into mainframe and enterprise software.
- Value
- $18.9B
- Announced
- July 2018
- Completed
- November 2018
- Sector
- Technology
- Deal type
- acquisition
- Acquirer
- Broadcom (United States)
- Target
- CA Technologies (United States)
Why it mattered
After the presidential order that stopped the Qualcomm takeover in March 2018, Hock Tan looked to infrastructure software as another way for Broadcom to grow. CA, founded in 1976 as Computer Associates, had itself grown by buying smaller mainframe software firms and was known for heavy job cuts at the companies it bought. In its fiscal 2018 it had $4.2bn of revenue, about $2.2bn of it from mainframe products, and about 11,300 employees.
On 11 July 2018 Broadcom offered $44.50 a share, a premium of about 20% to CA's last close before the announcement, for an equity value of $18.9bn and an enterprise value of $18.4bn, funded with cash and $18.0bn of new debt. It pointed to CA's recurring revenue, with bookings averaging more than three years, and promised long-term adjusted EBITDA margins above 55%. Investors were unconvinced: the next day Broadcom's shares fell as much as 19%, their biggest drop ever, as analysts struggled to see the strategic logic, and The Register called it the "Weirdest. Acquisition. Ever." In October Senator Rand Paul, arguing that Broadcom's move of its domicile to the US should not end scrutiny by the foreign-investment committee, asked the Treasury to review the deal; the shares fell more than 5% that day. The purchase completed on 5 November 2018.
What it left behind
Broadcom treated CA much as CA had treated its own acquisitions. Layoffs started immediately after closing; Newsday reported that about 40% of CA's US staff, almost 2,000 people, would go, and the Islandia campus on Long Island was later abandoned and demolished in January 2024. Software rose from 9% of Broadcom's revenue in the last quarter before the deal to 21% a year later. Broadcom repeated the move with Symantec's enterprise security business for $10.7bn in 2019 and VMware, agreed in 2022 at $69bn and completed in November 2023; in fiscal 2025 infrastructure software brought in $27.0bn, 42% of Broadcom's revenue. An acquirer's operating model can itself be the strategy: Broadcom was criticised for buying outside its industry, but what it bought was a type of asset — an entrenched franchise with recurring revenue — that its playbook could run and that it went on to buy again.