Broadcom Hits Out At ‘Fake’ Pentagon Memo Of CA Acquisition

There are concerns that outside forces are trying to disrupt the surprising acquisition of veteran software supplier CA Technologies by chipmaker Broadcom.

It comes after the US Department of Defense said on Wednesday that a memo purporting to show the Pentagon asking for a national security review of the CA acquisition, was likely fake.

Broadcom had shocked the markets in July this year with its surprise announcement that it was acquiring veteran enterprise software specialist CA Technologies.

Fake memo

The move was highly puzzling for many analysts, as it combines two firms with two totally disparate businesses.

Nevertheless, the chipmaker is currently in the process of acquiring CA for $18.9 billion (£16.7bn) in cash.

The deal is being explained by both parties as building “one of the world’s leading infrastructure technology companies.”

But now Reuters reported a spokeswoman as confirming that the Pentagon is looking into who wrote the fake memo.

The spokeswoman reportedly said they considered it likely to be fake, based on an initial assessment.

And Broadcom has hit out at the ‘fake’ memo, saying in a statement that the two companies are American, “and there is no basis in fact or law for CFIUS review of our pending transaction.”

“We have learned that a fraudulent memo purported to be signed by the US Department of Defense (“DoD”) is circulating among Senators and members of Congress referencing the possible need for review of Broadcom’s acquisition of CA Technologies by the Committee on Foreign Investment in the United States (“CFIUS”),” said Broadcom.

“We have been informed by DoD officials that this memo is in fact a forged document,” it said.

According to Reuters, the Committee on Foreign Investment in the United States (CFIUS) is the government panel that reviews deals for potential national security risks.

Panel members include representatives of several US agencies, including the Department of Defense and the Treasury Department.

Foreign concerns

Broadcom of course started life by being headquartered in Singapore.

However in 2018 it ‘redomiciled’ in the United States’ as Broadcom Inc.

But that failed to stop it being rebuffed earlier this year by President Donald Trump after its attempted hostile $117bn takeover of US-based Qualcomm.

The US President blocked that deal on national security grounds.

Long history

CA meanwhile is a veteran enterprise software giant, that of course used to be known as Computer Associates until 2010.

CA was founded in 1976 by the flamboyant Charles Wang and business partner Russell Artzt. Since then, CA has been one of the most acquisitive software companies in the history of the software market. In the late 1980s CA became the first software company to top $1 billion (£885 million) in sales.

Under Wang’s leadership Computer Associates branched out into other areas including systems management, anti-virus, security, ID management, applications performance monitoring, devops etc.

Indeed, CA’s fierce acquisition strategy helped it become, at one stage, the second largest software provider in the United States.

But now CA’s main business is mainframe software, in which it is second only to IBM.

That business generates cash flow of $10 billion a year, but its revenue growth has been flat as customers increasingly opt for cloud services over old-fashioned hardware.

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