Broadcom Shares Sink as Latest Deal Puzzles Wall Street

Broadcom agrees to buy CA Technologies for $19 billion

Broadcom agrees to buy CA Technologies for $19 billion

That hostile takeover bid was blocked in March by the U.S government on national-security grounds.

Broadcom Inc. shares fell almost 14% on Thursday, showing the challenge Chief Executive Hock Tan faces in persuading investors that his $18.9 billion purchase of the software company CA Technologies makes sense for the chip giant.

The agreement comes in the wake of Trump's order blocking its bid for Qualcomm, citing national security concerns. The administration said it was anxious about allowing US -based Qualcomm to be taken over by a foreign-based firm that could potentially pass on key technology to rival nations such as China.

Broadcom, which had tried to vigorously push back on regulators' worries, has since relocated its headquarters to San Jose, Calif.

"This transaction represents an important building block as we create one of the world's leading infrastructure technology companies", Broadcom Chief Executive Hock Tan said in a statement. With a deal for CA, Broadcom is seeking to move into software used to manage business planning and other processes.

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FILE PHOTO: A sign to the campus offices of chip maker Broadcom Ltd is shown in Irvine, California, U.S., November 6, 2017.

Broadcom will pay US$44.50 per share for CA Technologies as part of the deal, which has been approved by the boards of directors of both companies.

CA Technologies stock soared almost 16 percent in after-hours trading to US$43.10 per share following the Broadcom acquisition news.

"It's the most freakish, defocused, non-strategic acquisition of the last decade", one private equity manager told Reuters. Unlike many online publications, we don't have a paywall or run banner advertising, because we want to keep our journalism open, without influence or the need to chase traffic.

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