Broadcom to acquire Symantec in $10 billion deal
Monday, August 12, 2019
The transaction, which was approved by Symantec’s Board of Directors, is expected to close before the end of the calendar year pending regulatory approvals. The…
Symantec Corp has announced it has entered into a definitive agreement to sell its Enterprise Security assets, which include the Symantec name, to Broadcom for $10.7 billion in cash.
The transaction, which was approved by Symantec’s Board of Directors, is expected to close before the end of the calendar year pending regulatory approvals. The Company expects to issue a special dividend of $12.00 per share for shareholders.
Broadcom Board of Directors have approved an increase of $1.1 billion to our remaining share repurchase authorisation, while maintaining our current debt levels; the total authorisation is now $1.6 billion. The Company expects to increase the regular quarterly dividend to $0.125 per share after the close of the transaction, funded solely by Consumer Cyber Safety’s on-going business and with the potential to increase future dividends, after the transition period and once stranded costs are eliminated.
According to Broadcom, the Symantec business is steady, predictable and can grow at mid-single digits, generating strong cash flow and earnings. Broadcom will be selling Symantec offices to cover a large portion of the estimated $1 billion cash cost to shed the estimated $1.5 billion in stranded costs.
“Symantec has a long history of offering unparalleled cyber technology,” said Daniel H. Schulman, Chairman of the Symantec Board of Directors. “It is a testament to our market leadership and dedication to the mission of making the world a safer place, that Broadcom has chosen Symantec’s Enterprise Security assets to expand their reach into cyber security. By unlocking value from Enterprise Security, we are significantly advancing our ongoing transformation strategy and positioning our consumer cyber safety business, Norton LifeLock, for success.”
Rick Hill, Symantec Interim President and CEO said “This is a transformative transaction that should maximise immediate value to our shareholders while maintaining ownership in a pure play consumer cyber safety business with predictability, growth and strong consistent profitability. In addition it allows the Enterprise Security business to grow and compete on an enterprise platform with a worldwide sales and distribution reach which can service our existing customers.
“It also allows our Norton LifeLock business, a world recognised leader in consumer and small business cyber safety to operate independently and give investors a clear understanding of the growth opportunity and strong financial performance.”
Upon closing of the transaction, Symantec expects to receive $10.7 billion, which is estimated to yield approximately $8.2 billion of after tax proceeds. Symantec expects to return approximately 100% of its after-tax cash proceeds in the form of a $12.00 per share special dividend to shareholders after the close of the transaction and expect to pay the special dividend in the fourth quarter of fiscal year 2020.
In addition, Symantec expect to increase regular dividend by 67 percent to $0.125 per share in the quarter following the close. The Board of Directors has approved an increase to our existing share repurchase authorisation up to $1.6 billion and, following the transition, Symantec believe its Norton LifeLock business can generate $1.50 annual non-GAAP earnings per share and achieve mid-single digit revenue growth year over year.