News of progress in Broadcom’s (AVGO) bid to acquire Symantec in an all-cash deal totaling over $22 billion seems to have pushed the security firm stock up 5% in pre-market trading this morning, but hasn’t had the same effect on Broadcom itself, which slumped $1.66 or .5%.
After a sizable spike last Wednesday, Symantec stood at a one year high of $25 per share. This morning, pre-market spiking puts it near $26.30.
In general, many experts feel like AVGO’s acquisition is part of a more comprehensive strategy.
Some cite the acquisition of IAM firm CA Technologies for $18 billion last year.
As a chipmaker, Broadcom has been under pressure due to Chinese trade tensions – because companies like AVGO that manufacture processors use products made by Chinese tech-telecom firm Huawei, the American president’s edict not to purchase from Huawei hurt the company’s sales recently.
Buying up firms like Symantec, which is one of the most prominent endpoint security companies in the industry, may be a way for Broadcom to diversify and enhance its image, in order to beat the tariff blues and other challenges that come its way in subsequent quarters.
“Broadcom’s acquisition of Symantec makes sense as an investment,” writes Ben Canner in Solutions Review. “But Broadcom’s previous acquisition of CA Technologies may also indicate a desire to blend the two kinds of digital perimeters.
Whether Broadcom does so through blending the solutions, their purchases highlight a simple truth: your enterprise needs a sophisticated digital perimeter. It must defend against identity threats and against external threats like malware. You need to determine whether your identity security solution needs integration with endpoint security to defend against the latter.
Broadcom’s investments indicate what they believe enterprises will need in the next few years. Following them might help guide your solution decision making.”
It’s good news for Symantec holders, which was part of analysis leading up to the latest news that AVGO has gotten funding.
“The deal could provide a much-needed shot in the arm for security software company Symantec, which has seen its fortunes decline considerably in the recent past,” wrote Trefis Team at Forbes Friday.
But the acquisition likely to be good news in the long term for Broadcom investors, too, and a bellwether for this part of the American market.