Broadcom is in advanced talks to acquire Symantec, the world’s largest cybersecurity company by revenue, the latest sign of the chip maker’s shift into selling software for large companies, Bloomberg reported. The news sent Symantec’s stock up nearly 14%.
After a wave of consolidation in the chip market, Broadcom now sees software as a key area of future growth. A Symantec acquisition, if it happens, would likely be similar in size to Broadcom’s $18.9 billion acquisition of data center software maker CA last year, based on Symantec’s current market capitalization of $15.5 billion. CA has worked out well for Broadcom since closing in November: On the company’s Q2 earnings call in June, CEO Hock Tan said the CA software unit “continues to perform above our original expectations.”
A Broadcom acquisition of Symantec would draw parallels to Intel’s $7.7 billion acquisition of cybersecurity company McAfee in 2011. But it seems unlikely that Broadcom would follow a similar path as Intel, whose strategy of integrating McAfee software in chips never panned out. Intel sold 51% of McAfee to TPG in 2016 for $3.1 billion.