Broadcom in talks to buy SAS software company

Broadcom INC.

is in talks to buy SAS Institute Inc., according to people familiar with the matter, in the latest move by the purchasing tech giant to bolster the corporate software market.

A deal, which would value SAS closely in the $ 15 billion to $ 20 billion range, could be finalized in the next few weeks, assuming the talks don’t falter, the people said. That number is the so-called enterprise value, some of the people said, which generally includes assumed debt and is adjusted for cash on the target’s balance sheet.

Broadcom has a market value of nearly $ 200 billion after its shares surged about 50% over the past year.

Broadcom, a semiconductor powerhouse built largely through acquisitions, has been seeking more deals since former President Donald Trump blocked its quest to buy rival Qualcomm. INC.

in 2018, citing security risks. Since then, Broadcom has moved its headquarters from Singapore to the US.

Broadcom CEO Hock Tan has focused on diversifying beyond the company’s core chip business and into the lucrative field of software. In 2018, it reached an approximately $ 19 billion deal to buy software company CA Technologies, formerly Computer Associates. The following year, Broadcom agreed to buy Symantec Body

the so-called entrepreneurial business for approximately $ 10.7 billion.

SAS, based in Cary, North Carolina, sells analytics, business intelligence and data management software. It has its roots in the 1960s, when universities came together to analyze treasures of agricultural data through a program called the Statistical Analysis System, according to its website. Incorporated in 1976, the company now has more than 12,000 employees and customers around the world. It is still run by co-founders Jim Goodnight and John Sall.

Big tech companies have focused on expanding software businesses, with INC.

last year agreed to buy the messaging company Slack Technologies INC.

for $ 27.7 billion and Microsoft Corp.

earlier this year agreed to pay $ 16 billion for Nuance Communications INC.

Broadcom’s big push into software with the purchase of CA Technologies took investors and competitors by surprise, given its long-standing focus on semiconductors. In the years since, Broadcom has joined its business software offerings to attract business customers and compete with companies like Microsoft. The CA acquisition has been viewed as a success, and the software now accounts for approximately 28% of Broadcom’s revenue.

Broadcom in June reported better than expected second quarter results. Its semiconductor revenue increased 20%, helped by chip shortages that fueled demand, while software revenue increased 4%.

Broadcom has roughly $ 9.5 billion in cash and hasn’t made a major acquisition in two years. When asked about potential deals on her June 3 earnings call, CFO Kirsten Spears said the company is committed to allocating 50% of its free cash flow to shareholders, M&A, buybacks. and payment of debts, before adding: “There is nothing yet.” on the M&A front that I can talk about. ” Earlier in the year, Tan had said that Broadcom would consider buybacks and perhaps debt repayment if it did not make an acquisition before the end of the fiscal year, which normally ends in October or November.

The latest potential deal comes as heavy M&A activity, especially in the tech sector, has come into question as executives and negotiators monitor Biden management’s plans to slow industry consolidation and be tougher on the tech giants.

Biden’s executive order last week encouraged regulatory agencies like the Federal Trade Commission to adopt new rules and policies to control the growing size and power of big tech platforms like INC.

and Facebook INC.

That could leave an opportunity for other tech firms to make deals while the biggest potential buyers are under scrutiny. But the FTC, chaired by Democrat Lina Khan, also voted to expand its mandate to pursue cases beyond the current standard of whether the practices harm consumers, broadening the universe of settlements it could examine.

Another large family business, Medline Industries Inc., agreed in June to sell itself to a group of buying companies for $ 34 billion, including debt. It was the largest leveraged buyout since the 2007-08 crisis and some advisers expect more sales from private companies to follow.

Write to Lombardo face in [email protected] and Dana Cimilluca in [email protected]

Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

Add Comment