CA signposts further acquisitions over the coming year

Top execs say more purchases are on the way

Acquisition

CA Technologies is expecting to make more acquisitions over the next 12 months, top executives told IT Pro, supplementing the $1.3 billion it spent snapping up smaller companies over the past year and a half.

The company has invested heavily in acquiring various tech startups over the past few months, purchasing security firm Veracode for $614 million in March this year and automation outfit Automic in December 2016 for $635 million.

When asked at CA World 2017, multiple executives confirmed to IT Pro that healthy spending on acquisitions was still very much on the company's agenda for the coming year, with a projected budget for the endeavour of up to $500 million.

"What we've been pretty consistently doing is $3-500 million a year in acquisitions," executive vice president of strategy and corporate development Jacob Lamm told IT Pro. "What should the market expect from us to do to augment our organic strategy - it's about $3-500 million a year."

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However, representatives from the company were also quick to point out that its focus is on in-house development first, rather than simply buying innovative companies.

"We have a strategy that focuses first and foremost on organic innovation, and we supplement this with strategic acquisitions. We will continue to do this moving into the future," said CA's president and chief product officer, Ayman Sayed.

He pointed to the fact that the majority of the new and updated products showcased at this year's conference were developed by CA, rather than the result of previous purchases.

"You will continue to see a mix like this, with an emphasis on organic," he said, "but we'll continue to acquire great companies if they fit in our strategy and complement our portfolio."

This was echoed by Lamm, who told IT Pro that CA puts a great deal of thought into which companies it acquires.

"We're very disciplined about how we approach the type of deals; it's got to really fit within our strategic pillars and our financial discipline also it's got to have the return and so we start with the strategy, but clearly it has to fit our financial profile as well."

CA's main use of acquisitions, he said, is to fill in holes in the company's portfolio regarding technical capability. He highlighted Automic as an example, citing the way the acquisition allowed CA to round out its DevOps portfolio.

"We did automation, but we didn't do business automation, we did more IT automation, and so Automic helps us fill primarily that gap; a big important area that supports our DevOps strategy in terms of digital automation."

In terms of what kind of companies CA will be looking to snap up over the next 12 months, Lamm told IT Pro that the most promising areas are likely to be security and DevOps. The company has an existing portfolio in both areas, so acquisitions in these fields would allow the company to build it out even further.

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