Broadcom’s stock plummeted on Thursday following news of its $18.9 billion acquisition of CA Technologies.
While investors fled, analysts familiar with the companies aren’t so sure that the deal is bad for Broadcom.
The bull case for Broadcom’s acquisition is multi-faceted: Some analysts see cross-over between the two companies’ product portfolios — particularly in mainframes, where Broadcom has a hardware footprint and CA Technologies has a software play.
Others see Broadcom as pivoting toward software in order to build out its portfolio the way a private equity firm might.
Broadcom’s surprise $18.9 billion acquisition of CA Technologies, announced Wednesday, has caused a chasm on Wall Street as investors and company analysts try to figure out whether or not the deal is a good thing.
Broadcom’s share price sunk 14% Thursday following the announcement of the deal, a sign of investors’ discomfort with the high pricetag and lack of clarity over what Broadcom, a semiconductor company, plans to do with what some see as an underperforming software company.
But not everyone is sour on the deal. While most analysts were surprised to hear of the acquisition, many think investors are missing the big idea behind Broadcom CEO Hock Tan’s seemingly spontaneous purchase.
“While we do …read more
Source:: Businessinsider – Finance