Broadcom Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K, dated November 5, 2018, announces the completion of Broadcom Inc.'s acquisition of CA, Inc. The transaction was structured as a merger where CA became a wholly owned subsidiary of Broadcom. The aggregate consideration for the acquisition was approximately $18.7 billion in cash, excluding transaction fees and expenses.
Key Financial Metrics and Capital Structure
The filing details significant new debt obligations incurred to fund the acquisition alongside cash on hand. Broadcom entered into a Credit Agreement establishing the following facilities:
- Revolving Facility: $5.0 billion unsecured revolving credit facility (five-year term). No borrowings were outstanding on the effective date.
- Term A-3 Facility: $9.0 billion unsecured term loan maturing in three years.
- Term A-5 Facility: $9.0 billion unsecured term loan maturing in five years.
The term loans were drawn in full on the effective date. The Credit Agreement includes a financial covenant requiring a Consolidated Interest Coverage Ratio of not less than 3.00:1.00.
Material Changes and Related Transactions
Concurrent with the acquisition of CA, Broadcom entered into a definitive agreement to sell Veracode, Inc., a wholly owned subsidiary of CA, to Thoma Bravo, LLC. The aggregate purchase price for this divestiture is $950 million, subject to customary closing conditions.
Outlook, Risks, and Contingencies
The filing notes that pro forma financial information and financial statements of the business acquired will be filed by amendment within 71 days. The Credit Agreement contains standard events of default, including nonpayment, breach of covenant, bankruptcy, and change of control. The company is not an emerging growth company.
Key Facts for Investor Verification
- Confirmation of the $18.7 billion cash consideration paid for CA, Inc.
- Verification of the $18.0 billion in new term debt ($9.0 billion Term A-3 and $9.0 billion Term A-5) and the $5.0 billion revolving credit facility.
- Details regarding the $950 million sale of Veracode, Inc. to Thoma Bravo, LLC.
- Future filing of pro forma financial information within 71 days to assess the combined entity's financial position.
- Compliance with the new 3.00:1.00 Consolidated Interest Coverage Ratio covenant.