Chipmaker Broadcom inks $19 billion deal to buy software company CA | Reuters

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Chipmaker Broadcom inks billion deal to buy software company CA | Reuters

Broadcom CEO Hock Tan is confident he can make deals. He wants to buy CA because it makes software. Software is important to him. He doesn’t want to be left out of the market.

Broadcom is now officially out of CFIUS jurisdiction. This means that the company doesn’t need to be reviewed by the committee anymore. The company was previously under review because of its foreign ownership, but now it is completely legal.

Tan’s selection of CA as Broadcomm’s next acquisition target, however…

Broadcom’s chips power smartphones, computers, and networking equipment. CA specializes in software for so called mainframes, big servers, and has been seeking expansion into business software. The two companies’ disparate corners of the technology industry means that Broadcom will benefit more from CA’s recurring revenue than operational synergies.

Broadcom CFO defends the deal saying that they know how to sell networking equipment because they sold networking equipment before. They also pointed out that they have experience with IBM mainframes. This means that Broadcom knows how to connect to IBM mainframes.

We believe this planned acquisition definitely creates unease among its current investors.

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