Cary-based SAS could be sold for up to $20 billion to Broadcom, WSJ report says
SAS Institute, a stalwart of the Triangle technology scene for decades, is in talks to sell itself to Broadcom, a California-based maker of semiconductors, according to a report Monday in The Wall Street Journal.
The potential sale would bring big change to SAS, one of the Triangle’s largest employers. SAS has been privately held since it was founded in 1976 by Jim Goodnight.
SAS, which makes analytical software, employs around 5,000 people at its headquarters in Cary, and thousands more around the globe.
According to The Wall Street Journal, the deal would value SAS between $15 billion and $20 billion, and it could close in a matter of weeks. The Journal cited “people familiar with the matter,” and noted the deal could still fall apart.
SAS spokeswoman Shannon Heath told The News & Observer in a statement Monday afternoon that the company “does not comment on rumors or speculation.”
“SAS remains focused on furthering innovation to best serve our customers,” Heath said.
Broadcom also has not responded to a request for comment about the potential deal.
SAS made $3 billion in revenue last year during the pandemic, which the company said was affected by the initial slowdown of the COVID-19 pandemic. At one point last year, the company warned it could lose money for the first time since it was founded. But, its perfect streak of profits continued, the company told The News & Observer earlier this year.
However, revenue did decline, with its 2020 totals representing a decline of about 2% to 3% from 2019. Nearly 50% of the company’s revenues comes from governmental organizations or the banking industry, according to SAS’s annual report.
If the deal with Broadcom were go through, it would be yet another billion-dollar acquisition for the company. In 2018, it bought CA Technologies for $19 billion, and last year it bought Symantec’s enterprise business for $11 billion.
Broadcom, led by CEO Hock Tan, was based in Singapore before moving its headquarters to the U.S. in 2018. That same year, the company saw an ambitious $117 billion attempt to buy the chip maker Qualcomm blocked by the administration of President Donald Trump, who cited national security as a reason to stop the deal.
Growth of SAS in NC
SAS is controlled by Goodnight, its 78-year-old CEO and founder. Under his leadership, SAS has gone from an academic exercise at N.C. State University into a billion-dollar enterprise.
Its success has made Goodnight, who owns a large chunk of the company, one of the richest men in North Carolina. Goodnight has a net worth of around $6.5 billion, according to a recent estimate by Forbes. John Sall, who helped co-found SAS, had a net worth of $3.2 billion.
For decades, Goodnight’s ownership of SAS made him the wealthiest individual in the state. But fellow Cary resident Tim Sweeney, the CEO of Epic Games, passed him this year for the first time, The News & Observer reported.
Michael Walden, a retired economist from N.C. State University and a longtime watcher of the region’s economy, said while the potential deal with Broadcom comes as a shock, it shouldn’t be a total surprise.
“The private owners of SAS are aging … and their financial gains have been subpar recently. Plus, they face increasing competition from similar services,” Walden said in an email.
But Walden warns a potential deal could be a setback for the Triangle — as it represents another headquarters loss for the region. In 2019, Raleigh software firm Red Hat was bought by IBM for $34 billion, though Red Hat has continued to grow since it was bought by IBM.
“While the region is attractive for tech companies like SAS, there is always the possibility some or all of the functions could be moved to another tech center by a new owner,” Walden said. “Although the Triangle will still continue to grow — especially in technology — any significant job and operational losses would be a setback for the region.”
The potential sale also comes after the firm has lost some executives during the pandemic.
In January, Oliver Schabenberger left his job as the No. 2 at another of the Triangle’s most influential tech companies.
Schabenberger, who was considered the heir apparent to Goodnight, left his role as chief technology officer and chief operating officer to join a the growing startup SingleStore, The N&O reported.
Randy Guard, who was SAS’s chief marketing officer until last year, also decamped to a startup. He now holds the same role for Durham-based fintech startup Spreedly.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate.
This story was originally published July 12, 2021 at 3:07 PM with the headline "Cary-based SAS could be sold for up to $20 billion to Broadcom, WSJ report says."
