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Broadcom To Acquire CA Technologies For Equity Value Of About $18.9 Bln

Broadcom Inc. (AVGO) said it agreed to acquire CA Technologies (CA). The all-cash transaction represents an equity value of about $18.9 billion, and an enterprise value of about $18.4 billion.

AVGO closed Wednesday regular trading at $243.44, down $7.12 or 2.84%. In the after-hours, the stock further dropped $16.34 or 6.71%.

CA closed regular trading at $37.21, up $0.06 or 0.16%. In the after-hours trade, the stock further gained $5.69 or 15.29%.

As per 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. 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 earnings per share. 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.

Broadcom said it 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.

The closing of the transaction is expected to occur in the fourth calendar quarter of 2018.

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