Broadcom may buy SAS for up to $20B

Unnamed sources said Broadcom has entered talks to buy SAS Institute, according to a report in the Wall Street Journal, in a deal worth up to $20 billion.

SAS told Fierce Electronics  it does not comment on rumors or speculation and Broadcom did not respond to a request to comment.

The deal make sense partly because chipmaker Broadcom bought software companies CA and Symantec in recent years in multi-billion dollar deals and could be interested in Cary, N.C.-based SAS’s analytics and data management software in yet another bid to diversify its holdings.  

Broadcom has $9.5 billion in cash available and reported $24 billion in 2020 revenues with a market capitalization value of $200 billion. In its second quarter results reported June 3, Broadcom saw revenues up 15% over the second quarter of 2020, reaching $6.6 billion, with 27% derived from software sales and 73% from chips.

For practical reasons, Symantec could be keen to sell, as cofounder Jim Goodnight is age 78 and has no clear successor, as Business N.C. noted in a tweet.  

 He, along with cofounder and billionaire John Sall, own most of the company with $3 billion in annual sales.

Alex Romanovich, a tech analyst and tech podcast host, tweeted that it makes sense for Broadcom to add more enterprise software and data products to its portfolio with an SAS purchase, but added there will be still be the “worry about cultural and product alignment.”

The possible deal comes at an unusual time for mergers in the tech industry, as Congress and the Biden administration are talking about clamping down on big tech firms such as Facebook at Google, while also showing strong support for billions in financial support to chip manufacturers.

Former President Trump blocked Broadcom’s plan to buy rival Qualcomm in 2018 over security risks and Broadcom then moved to San Jose from its corporate headquarters in Singapore.

Tony Baer, analyst and founder of dbInsight said if Broadcom buys SAS it further diversifies its software purchases beyond the enterprise security obtained from Symantec and other enterprise software from CA.  “In software, Broadcom seems to prefer mature, annuity businesses,” he tweeted.

 In an email, analyst Jack Gold at J. Gold Associates said the SAS purchase would be a bit further afield than in the past with the SAS focus on business intelligence software and analytics.

Gold warned, however, that software acquisitions by chip companies “don’t always work out so well,” he said in an email. “Remember, Intel bought McAfee that didn’t last that long and they took a major write-down on the deal,” Gold said.

“Chip companies tend not to know what do with software assets unless it is directly related to their prime business” such as as software for compilers to make chips run faster or improve chip design, Gold said.

“It is not yet clear how the whole of the assets complement each other,” Gold added. “ Will Broadcom end up being a broad-based diversified holding company? That hasn’t worked so well for tech companies.”

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