- Great M&A can build wealth compounding empires and almost no one does smart M&A better than Broadcom.
- AVGO has been diversifying into software for four years and is now making its largest deal in history, buying VMW for $61 billion.
- 50% of sales will now come from recurring software sales, creating the most stable cash flow in the industry. This is why analysts, rating agencies, and bond investors all love this deal.
- CEO Hock Tan is a mad genius who has proven he can make dividend investors rich, and this deal should help AVGO deliver on its 10+% growth and 13+% total return guidance for mans years to come.
- AVGO is buying VMW for 7.2X post-synergy cash-adjusted earnings, a fantastic bargain. Today AVGO is about 6% undervalued at 13.4X cash-adjusted earnings, a classic Buffett-style "wonderful company at a fair price." Analysts think AVGO could deliver 150% returns in the next five years, beating the market by 4X and that might prove conservative.
For further details see:
4 Reasons I Love Broadcom's $61 Billion Deal And So Should You