Broadcom’s $18.9 Billion Acquisition of CA Technologies

Wachtell Lipton, Cleary, Ropes & Gray and Wilson Sonsini advised on the deal

Broadcom Inc. (NASDAQ:AVGO), a leading semiconductor device supplier to the wired, wireless, enterprise storage, and industrial end markets, and CA Technologies (NASDAQ:CA), one of the world’s leading providers of information technology (IT) management software and solutions, 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 (“VWAP”) for the last 30 trading days. The all-cash transaction represents an equity value of approximately $18.9 billion, and an enterprise value of approximately $18.4 billion.

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 $23.9 billion and last twelve months non-GAAP Adjusted EBITDA of approximately $11.6 billion.

As a global leader in mainframe and enterprise software, CA’s solutions help organizations of all sizes develop, manage, and secure complex IT environments that increase productivity and enhance competitiveness. CA leverages its learnings and development expertise across its Mainframe and Enterprise Solutions businesses, resulting in cross enterprise, multi-platform support for customers. The majority of CA’s largest customers transact with CA across both its Mainframe and Enterprise Solutions portfolios. CA benefits from predictable and recurring revenues with the average duration of bookings exceeding three years. CA operates across 40 countries and currently holds more than 1,500 patents worldwide, with more than 950 patents pending.

Broadcom intends to fund the transaction with cash on hand and $18.0 billion 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.

Wachtell advised Broadcom wiht partners David Karp (Picture), Ronald Chen (M&A), Adam Shapiro (Executive compensation and benefits), Gregory Pessin (Finance), T. Eiko Stange (Tax) and Selwyn Goldberg (IP&IT).

Gottlieb Steen & Hamilton is serving as antitrust counsel to Broadcom with a team led by George Cary (Picture).

Wilson Sonsini Goodrich & Rosati advised CA with a team including Mike Ringler, Derek Liu, Rich Mullen, Jini Chatterjee, Brian Chan (M&A), John Fore, Mark Fitzgerald, Mark Bass, Dana Hall, Aaron Wax, Oscar Loui, Andrew Lu (Corporate/Securities), Scott Sher, Roisin Comerford (Antitrust), James Clessuras, James Gannon? (Technology Transactions), Scott M?cCall?, Brandon Gantus, Jessica Bliss (Employee Benefits and Compensation), Susan Reinstra, James McCann, Martin Sul, Lee Cumberland, Sean Wilkinson (Real Estate), Martina Tsatalis, Matthew Damm, Matt Gorman, Brian Kennedy (Employment Law), Eileen Marshall, Devin Heckman (Tax), Matt Staples, Patrick Kane (Privacy), Josephine Aiello LeBeau, Stephen Heifetz, Joshua Gruenspecht?, Larry Perrone and Anne Seymour (Regulatory and Compliance).

 

Involved fees earner: Michael Ringler – Wilson Sonsini Goodrich & Rosati; Derek Liu – Wilson Sonsini Goodrich & Rosati; Rich Mullen – Wilson Sonsini Goodrich & Rosati; Jini Chatterjee – Wilson Sonsini Goodrich & Rosati; Brian Chan – Wilson Sonsini Goodrich & Rosati; John Fore – Wilson Sonsini Goodrich & Rosati; Mark Fitzgerald – Wilson Sonsini Goodrich & Rosati; Mark Bass – Wilson Sonsini Goodrich & Rosati; Dana James Hall – Wilson Sonsini Goodrich & Rosati; Aaron Wax – Wilson Sonsini Goodrich & Rosati; Oscar Loui – Wilson Sonsini Goodrich & Rosati; Andrew Lu – Wilson Sonsini Goodrich & Rosati; Scott Sher – Wilson Sonsini Goodrich & Rosati; Roisin Comerford – Wilson Sonsini Goodrich & Rosati; James Clessuras – Wilson Sonsini Goodrich & Rosati; James Gannon? – Wilson Sonsini Goodrich & Rosati; Scott McCall – Wilson Sonsini Goodrich & Rosati; Brandon Gantus – Wilson Sonsini Goodrich & Rosati; Jessica Bliss – Wilson Sonsini Goodrich & Rosati; Marina Tsatalis – Wilson Sonsini Goodrich & Rosati; Matthew Damm – Wilson Sonsini Goodrich & Rosati; Matthew Gorman – Wilson Sonsini Goodrich & Rosati; Susan Reinstra – Wilson Sonsini Goodrich & Rosati; James McCann – Wilson Sonsini Goodrich & Rosati; Martin Sul – Wilson Sonsini Goodrich & Rosati; Lee Cumberland – Wilson Sonsini Goodrich & Rosati; Sean Wilkinson – Wilson Sonsini Goodrich & Rosati; Eileen Marshall – Wilson Sonsini Goodrich & Rosati; Devin Heckman – Wilson Sonsini Goodrich & Rosati; Matthew Staples – Wilson Sonsini Goodrich & Rosati; Patrick Kane – Wilson Sonsini Goodrich & Rosati; Josephine Aiello LeBeau – Wilson Sonsini Goodrich & Rosati; Stephen Heifetz – Wilson Sonsini Goodrich & Rosati; Joshua Gruenspecht – Wilson Sonsini Goodrich & Rosati; Larry Perrone – Wilson Sonsini Goodrich & Rosati; Anne Seymour – Wilson Sonsini Goodrich & Rosati; David Karp – Wachtell, Lipton, Rosen & Katz; Ronald Chen – Wachtell, Lipton, Rosen & Katz; Adam Shapiro – Wachtell, Lipton, Rosen & Katz; Gregory Pessin – Wachtell, Lipton, Rosen & Katz; Eiko Stange – Wachtell, Lipton, Rosen & Katz; Selwyn Goldberg – Wachtell, Lipton, Rosen & Katz; George Cary – Cleary Gottlieb Steen & Hamilton;

Law Firms: Wilson Sonsini Goodrich & Rosati; Wachtell, Lipton, Rosen & Katz; Cleary Gottlieb Steen & Hamilton;

Clients: Broadcom Corporation; CA Technology, Inc.;

 

Author: Ambrogio Visconti