An acquisition price of $15 billion works out to an offer value of just over $24 for Symantec's stock. This represents a premium of roughly 15% to our price estimate of $21 for the company's stock as detailed further below.
In our opinion, a potential deal with Broadcom makes sense because:
The deal could provide a much-needed shot in the arm for security software company Symantec, which has seen its fortunes decline considerably over recent yearsRevenues for the company's Consumer Security business
have declined steadily
The Enterprise Security business
was also under pressure in Q1 due to technical issues in the company's cloud product and a loss of business from small and medium enterprisesAnother issue the company (and its stock) has had to content with over recent months is the spate of management exitsBroadcom could potentially realize sizable cost savings by merging Symantec with CA, and also improve the company's focus on a specific set of clients in the long run (similar to what it did with CA).
The sections below detail the forecasts behind our $21 estimate for Symantec's stock.