- 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
CAGR
- Expected to Close in Fourth Calendar Quarter of
2018
SAN JOSE, Calif. and
NEW YORK, July 11, 2018 /PRNewswire/ -- Broadcom Inc.
(NASDAQ: AVGO), a leading semiconductor device supplier to the
wired, wireless, enterprise storage, and industrial end markets,
and CA Technologies (NASDAQ: CA), one of the world's leading
providers of information technology (IT) management software and
solutions, today announced that the companies have entered into a
definitive agreement under which Broadcom has agreed to acquire CA
to build one of the world's leading infrastructure technology
companies.
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
("VWAP") 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 Chief Executive Officer of 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 Chief Executive
Officer. "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
Broadcom's non-GAAP EPS. On a combined basis, Broadcom 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.
As a global leader 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. Broadcom 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.
Additional Materials
An investor presentation and fact sheet will be posted at
investors.broadcom.com and will be filed with the Securities and
Exchange Commission.
About Broadcom Inc.
Broadcom Inc. (NASDAQ:AVGO), a U.S. based corporation
headquartered in San Jose, CA, is
a leading designer, developer and global supplier of a broad range
of digital and analog semiconductor connectivity solutions.
Broadcom Inc.'s extensive product portfolio serves four primary end
markets: wired infrastructure, wireless communications, enterprise
storage and industrial & other. Applications for our products
in these end markets include: data center networking, home
connectivity, set-top box, broadband access, telecommunications
equipment, smartphones and base stations, data center servers and
storage, factory automation, power generation and alternative
energy systems, and electronic displays.
About CA Technologies
CA Technologies (NASDAQ:CA) creates software that fuels
transformation for companies and enables them to seize the
opportunities of the application economy. Software is at the heart
of every business in every industry. From planning, to development,
to management and security, CA is working with companies worldwide
to change the way we live, transact, and communicate – across
mobile, private and public cloud, distributed and mainframe
environments. Learn more at www.ca.com.
Non-GAAP Financial Measures
In addition to GAAP reporting, Broadcom provides investors with
certain information on a non-GAAP basis, including earnings before
interest, taxes, depreciation and amortization ("EBITDA"). This
non-GAAP information excludes amortization of acquisition-related
intangibles, share-based compensation expense, restructuring
charges, acquisition-related costs, and debt extinguishment losses.
Management does not believe that the excluded items are reflective
of Broadcom's underlying performance. The exclusion of these and
other similar items from Broadcom's non-GAAP presentation should
not be interpreted as implying that these items are non-recurring,
infrequent or unusual. Broadcom believes this non-GAAP financial
information provides additional insight into the Company's on-going
performance and has therefore chosen to provide this information to
investors for a more consistent basis of comparison and to help
them evaluate the results of the Company's on-going operations and
enable more meaningful period to period comparisons. These non-GAAP
measures are provided in addition to, and not as a substitute for,
or superior to, measures of financial performance prepared in
accordance with GAAP. Broadcom is not readily able to provide a
reconciliation of the projected non-GAAP financial information
presented herein to the relevant projected GAAP financial measures
thereof without unreasonable effort.
A reconciliation of non-GAAP financial data included in this
announcement to relevant GAAP
historical financial data is available in the Investor Center on
the Broadcom website.
Cautionary Note Regarding Forward-Looking Statements
This announcement contains forward-looking statements (including
within the meaning of Section 21E of the United States Securities
Exchange Act of 1934, as amended, and Section 27A of the United
States Securities Act of 1933, as amended) concerning Broadcom and
CA. These statements include, but are not limited to,
statements regarding the expected completion and timing of the
proposed transaction, expected benefits and costs of the proposed
transaction, and management plans relating to the proposed
transaction, and statements that address each company's expected
future business and financial performance and other statements
identified by words such as "will", "expect", "believe",
"anticipate", "estimate", "should", "intend", "plan", "potential",
"predict" "project", "aim", and similar words, phrases or
expressions. These forward-looking statements are based on
current expectations and beliefs of the management of Broadcom and
CA (as the case may be), as well as assumptions made by, and
information currently available to, such management, current market
trends and market conditions and involve risks and uncertainties,
many of which are outside of each company's and each company's
management's control, and which may cause actual results to differ
materially from those contained in forward-looking
statements. Accordingly, you should not place undue reliance
on such statements.
Those risks, uncertainties and assumptions include: the risk
that the proposed transaction may not be completed in a timely
manner or at all, which may adversely affect Broadcom's and CA's
business and the price of the common stock of Broadcom and CA; the
failure to satisfy any of the conditions to the consummation of the
proposed transaction, including the adoption of the Merger
Agreement by the stockholders of CA and the receipt of certain
regulatory approvals; the occurrence of any event, change or other
circumstance that could give rise to the termination of the Merger
Agreement; the effect of the announcement or pendency of the
proposed transaction on Broadcom's and CA's business relationships,
operating results and business generally; risks that the proposed
transaction disrupts current plans and operations and the potential
difficulties in employee retention as a result of the proposed
transaction; risks related to diverting management's attention from
ongoing business operations; the outcome of any legal proceedings
that may be instituted related to the Merger Agreement or the
proposed transaction; unexpected costs, charges or expenses
resulting from the proposed transaction; the ability of Broadcom to
achieve its plans, forecasts and other expectations with respect to
CA's business after completion of the proposed transaction; and
other risks described in CA's filings and Broadcom's and its
predecessors' filings with the United States Securities and
Exchange Commission, such as Quarterly Reports on Form 10-Q and
Annual Reports on Form 10-K.
Other particular uncertainties that could materially affect
future results include risks associated with: any loss of
Broadcom's or CA's significant customers and fluctuations in the
timing and volume of significant customer demand; Broadcom's
dependence on contract manufacturing and outsourced supply chain;
Broadcom's dependency on a limited number of suppliers; any other
acquisitions Broadcom may make, such as delays, challenges and
expenses associated with receiving governmental and regulatory
approvals and satisfying other closing conditions, and with
integrating acquired companies with Broadcom's existing businesses
and Broadcom's ability to achieve the benefits, growth prospects
and synergies expected by such acquisitions; Broadcom's ability to
accurately estimate customers' demand and adjust its manufacturing
and supply chain accordingly; Broadcom's significant indebtedness,
including the additional significant indebtedness that Broadcom
expects to incur in connection with the proposed transaction and
the need to generate sufficient cash flows to service and repay
such debt; dependence on a small number of markets and the rate of
growth in these markets; dependence on and risks associated with
distributors of Broadcom products; dependence on senior management;
quarterly and annual fluctuations in operating results; global
economic conditions and concerns; the amount and frequency of
Broadcom stock repurchases; cyclicality in the semiconductor or
enterprise software industry or in target markets; Broadcom's
competitive performance and ability to continue achieving design
wins with its customers, as well as the timing of any design wins;
prolonged disruptions of Broadcom's or its contract manufacturers'
manufacturing facilities or other significant operations;
Broadcom's ability to improve its manufacturing efficiency and
quality; Broadcom's dependence on outsourced service providers for
certain key business services and their ability to execute to
Broadcom's requirements; Broadcom's ability to maintain or improve
gross margin; each of Broadcom's and CA's ability to protect its
respective intellectual property and the unpredictability of any
associated litigation expenses; any expenses or reputational damage
associated with resolving customer product warranty and
indemnification claims; Broadcom's and CA's ability to sell to new
types of customers and to keep pace with technological advances;
market acceptance of the end products into which Broadcom's and
CA's products are designed; Broadcom's overall cash tax costs,
legislation that may impact its overall cash tax costs and its
ability to maintain tax concessions in certain jurisdictions; and
other events and trends on a national, regional and global scale,
including those of a political, economic, business, competitive and
regulatory nature.
Forward-looking statements speak only as of the date of this
communication. Neither Broadcom nor CA undertake any intent
or obligation to publicly update or revise any of the estimates and
other forward-looking statements made in this announcement, whether
as a result of new information, future events or otherwise, except
as required by law.
Additional Information and Where to Find It
This communication is being made in respect of the proposed
transaction involving CA and Broadcom. In connection with the
proposed transaction, CA intends to file relevant materials with
the Securities and Exchange Commission (the "SEC"), including a
preliminary proxy statement on Schedule 14A. Promptly after filing
its definitive proxy statement with the SEC, CA will mail the
definitive proxy statement and a proxy card to each stockholder of
CA entitled to vote at the special meeting relating to the proposed
transaction. This communication is not a substitute for the proxy
statement or any other document that CA may file with the SEC or
send to its stockholders in connection with the proposed
transaction. BEFORE MAKING ANY VOTING DECISION, STOCKHOLDERS
OF CA ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS
OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN
CONNECTION WITH THE PROPOSED TRANSACTION THAT CA WILL FILE WITH THE
SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT CA AND THE PROPOSED TRANSACTION. The definitive
proxy statement, the preliminary proxy statement and other relevant
materials in connection with the proposed transaction (when they
become available), and any other documents filed by CA with the
SEC, may be obtained free of charge at the SEC's website
(http://www.sec.gov) or at CA's website (http://www.ca.com) or by
contacting CA's Investor Relations at traci.tsuchiguchi@ca.com.
Participants in the Solicitation
CA and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from CA's stockholders
with respect to the proposed transaction. Information about CA's
directors and executive officers and their ownership of CA's common
stock is set forth in CA's proxy statement on Schedule 14A filed
with the SEC on June 29, 2018, and
CA's Annual Report on Form 10-K for the fiscal year ended
March 31, 2018, which was filed with
the SEC on May 9, 2018. Additional
information regarding the potential participants, and their direct
or indirect interests in the proposed transaction, by security
holdings or otherwise, will be set forth in the proxy statement and
other materials to be filed with SEC in connection with the
proposed transaction.
Contact for Broadcom:
Joele Frank / Steve Frankel / Andi
Rose
Joele Frank, Wilkinson Brimmer
Katcher
212-355-4449
Contact for CA Technologies:
Joseph Stunkard
Corporate Communications
646-826-6010
joseph.stunkard@ca.com
View original
content:http://www.prnewswire.com/news-releases/broadcom-to-acquire-ca-technologies-for-18-9-billion-in-cash-300679787.html
SOURCE Broadcom Inc.