Chipmaker Broadcom Inc’s surprise bid to buy software company CA Inc for US$18.9 billion wiped off the same amount from its market value on Thursday, with investors and analysts struggling to find a clear reason for the deal.

Citing an acquisition with no potential synergies, investors drove the company’s shares down 19 per cent to $197.50 – their worst day ever. CA’s share price rose 18.5 per cent to $44.10.

Broadcom, which has mushroomed in value by buying out rivals in the past decade’s surge in mobile phone production, agreed on Wednesday to buy mainframe software company CA for $44.50 per share in cash, months after President Donald Trump blocked its $117 billion mega-merger with Qualcomm Inc.

While some analysts said the shift in sectoral focus might prove another masterstroke by Broadcom Chief Executive Officer Hock Tan, many raised concerns about a deal that lowers Broadcom’s top line growth to three per cent from five per cent.

“It’s the most bizarre, defocused, non-strategic acquisition of the last decade,” said Eric Schiffer, chief executive of the Patriarch Organization, a Los Angeles-based private-equity firm.

At least two analysts downgraded the stock, while two other analysts cut their price targets. Brokerage B Riley was the most bearish with a price target cut of $63 to $245.

“What the Hock?” analysts from brokerage Evercore wrote in a note. “We think investors will likely be disappointed at this deal, which seems more financial engineering/PE driven than due to any strategic rationale.”



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