Broadcom Is Said to Be in Talks to Buy SAS Institute for Up to $20B

Broadcom  (AVGO) - Get Report shares rose after a media report report said the semiconductor titan was in talks to acquire data-analytics-software major SAS Institute for $15 billion to $20 billion.

Knowledgeable sources told The Wall Street Journal of the deal. They said it could be finalized in coming weeks, though there’s no guarantee that an agreement will be reached. SAS Institute is headquartered in Cary, N.C.

Broadcom Chief Executive Hock Tan has sought to diversify the company beyond its core chip business and push into lucrative software areas, the Journal reported.

The stock recently traded at $485.29, up 1.1%. It has gained 8% over the past six months, lagging the S&P 500’s 15% rise.

Broadcom Earnings and Revenue Outlook Exceed Estimates 

Earlier this month Broadcom said it entered a consent decree with the Federal Trade Commission, settling charges of monopolistic practices. 

The company was charged with requiring customers to source certain components from the company exclusively or almost exclusively.

Broadcom said in a statement to Bloomberg News that it was pleased to move forward with the settlement along the lines of an earlier accord with the European Union.

Jim Cramer in Real Money: No Reason for the Drop in the Chip Stocks

Morningstar analyst Abhinav Davuluri puts the fair value of Broadcom at $400.

“We remain positive on Broadcom’s networking, storage, and broadband business units, and we applaud the firm’s integration efforts of its software acquisitions such as Symantec and CA Technologies,” he wrote last month.

“We are raising our value estimate for narrow-moat Broadcom to $400 per share from $350 as we incorporate a stronger near-term outlook, but we recommend prospective investors seek a wider margin of safety.”

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