Semiconductor company Broadcom is in talks to acquire SAS?

It has been reported that Broadcom, a semiconductor manufacturing company based in the United States and Singapore, is in talks to acquire SAS, a software company that uses AI to conduct marketing analytics, etc. Broadcom, a semiconductor-focused company, acquired a software company in 2018, and this acquisition seems to be aimed at strengthening enterprise software.

Broadcom is a publicly traded company established in 1991 and is a fabless company that handles a wide range of semiconductor and IC products covering computer networks and telecommunication networks. Although Broadcom’s main business is semiconductor manufacturing, it is known that it has acquired a number of companies to enter new markets.

Broadcom, headquartered in Singapore at the time, moved its headquarters to the United States after pointing out that former President Trump had national security concerns with the acquisition of Qualcomm. Broadcom Software accounts for 28% of total sales, and the acquisition is said to be aimed at strengthening the software division.

SAS is a privately held company that was founded in 1976 and deals with a wide range of analytics software, including marketing and risk management, including statistical analysis systems with annual revenues of $3 billion. SAS is known for providing generous benefits to its 5,200 employees, with employee turnover rates above the industry average of 20%, while SAS averages less than 4% per year. The reason it’s private is that SAS CEO James Goodnight said that one of the reasons the company went public in 2000 is to raise money, but the company has high returns, doesn’t need funding, and is under pressure to meet quarterly earnings expectations. I explained that I wanted to avoid it.

Regarding the acquisition, reports say that SAS is valued at $15 billion to $20 billion, and negotiations are expected to be completed within the next few weeks. As for the reason SAS is considering the sale, analyst Ahn analyzed that Goodnight CEO is 78 years old, and there are many reasons to consider the sale. It also analyzed that the reported acquisition price seems reasonable given that SAS has penetrated widely into large enterprises and an advanced analytical model is absolutely necessary. Related information can be found here.