Broadcom to acquire CA Technologies for $44.50 per share in cash
Broadcom (AVGO) and CA Technologies (CA) 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 for the last 30 trading days.
The all-cash transaction represents an equity value of approximately $18.9B, and an enterprise value of approximately $18.4B.
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 $23.9B and last twelve months non-GAAP Adjusted EBITDA of approximately $11.6B.
Broadcom intends to fund the transaction with cash on hand and $18B 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.
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