Semiconductor-devices maker Broadcom Inc. agreed to acquire the enterprise-security business of Symantec Corp., including the Symantec name, for $10.7 billion in cash.
Broadcom intends to fund the transaction with proceeds from new committed debt financing, according to an Aug. 8 news release. The news comes after Broadcom previously sought to buy the cybersecurity company outright, but the two were reportedly unable to agree on a price.
Broadcom said it expects the transaction to drive over $2 billion of revenues and approximately $1.3 billion of pro forma EBITDA, including synergies. The company also expects the transaction to generate in excess of $1 billion of run-rate cost synergies within 12 months following close.
Following the announcement of the deal, Symantec's board increased the company's remaining share repurchase authorization by an additional $1.1 billion. The total share authorization is now $1.6 billion.
Symantec, which expects to receive approximately $8.2 billion in after-tax proceeds from the deal, will issue a special dividend of $12.00 per share for shareholders after the close of the transaction. The company expects to pay the special dividend in the fiscal fourth quarter of 2020.
Additionally, Symantec's board engaged an executive search firm to help find a permanent CEO for its consumer business.
"This is a transformative transaction that should maximize immediate value to our shareholders while maintaining ownership in a pure-play consumer cyber safety business with predictability, growth and strong consistent profitability," Symantec Interim President and CEO Rick Hill said in a news release.
The transaction — which is subject to regulatory approvals in the U.S., the EU and Japan, as well as other closing conditions — is expected to close in Broadcom's fiscal first quarter of 2020, which begins Nov. 4, 2019.
Goldman Sachs & Co. LLC is the financial adviser, and Fenwick & West LLP is the legal adviser to Symantec.