US chipmaker Broadcom (AVGO) has $19bn wiped off its market value, after an out-of-sector deal confused investors | City A.M.

Californian semiconductor chipmaker Broadcom has lost $19bn (£13.7bn) in market value so far today, after a surprise deal to acquire software company CA for $18.9m didn’t sit well with investors and analysts.

The company revealed no clear reason behind yesterday’s acquisition, which led stymied investors to drive down its share price as low as 19 per cent to $197.50 in its biggest loss to date. CA’s share price, meanwhile, has risen 18 per cent.

The news comes after President Donald Trump blocked its $117bn merger with Chinese firm Qualcomm earlier this year, as a casualty of the ongoing trade war between the US and China.

Read more: Broadcom drops pursuit of Qualcomm after Trump blocks deal

Analysts from B Riley wrote in a note that the unexpected deal could create “a multi-quarter share overhang”, cutting its price target by $63 to $245.

David Madden at CMC Markets said that while Broadcom’s stock has soared in recent years due to its acquisition habit, traders are questioning the takeover as they can’t see “an obvious connection” between the two companies.

“They are in different spaces of the tech world, and some dealers might view this deal, as a takeover for the sake of expanding,” he added.

“CEO Hock Tan has a great track record when it comes to expansion, so it’s hard to question him the takeover king, but the severe sell-off in the stock suggests he has lost a few subjects.”