Broadcom will acquire VMware for $61 billion in cash and shares, depending on the closing price of Broadcom ordinary stock on May 25, 2022, the firms said on Thursday.
The deal would be one of the biggest technology purchases in history. Just behind Microsoft’s $69 billion acquisition of Activision Blizzard, and Dell’s 2016 acquisition of EMC for $67 billion.
Broadcom is the most acquisitive semiconductor company, using acquisitions to fuel its expansion over the past few years. It previously acquired CA Technologies for $18.9 billion in 2018.
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But, in 2018, when Broadcom sought to acquire Qualcomm for $117 billion then-President Donald Trump halted the deal, citing national security concerns. So the company bought Symantec for $10.7 billion in 2019 – and ever since had not made any significant acquisitions.
Michael Dell, founder, and CEO of the American multinational Dell Inc., holds a roughly $16.2 billion stake in VMware, which is approximately 40 percent of VMware. So he is expected to have a significant voice in Broadcom Inc.’s proposed acquisition of the cloud-computing company. Sunday’s edition of Bloomberg News stated that the two corporations are in merger negotiations.
Dell first purchased the firm in 2016 when it acquired EMC. Last year, 2021, VMware was separated from Dell in an effort to eliminate debt.
Alongside the purchase announcement, Broadcom released Thursday second-quarter numbers that exceeded expectations as well as optimistic projections for the third quarter.
Thursday’s early trading session saw gains of less than 1 percent for shares of Broadcom and VMWare.
Broadcom intends to rename its Broadcom Software Group as VMware and integrate its current infrastructure and security software capabilities under VMware. VMware CEO Raghu Raghuram explains, “Combining our assets and excellent team with Broadcom’s current business software portfolio, all housed under the VMware brand, produces a tremendous enterprise software player.”
The transaction is scheduled to conclude during Broadcom’s fiscal year 2023, with backing from Michael Dell, who, along with Silver Lake, controls around 50 percent of VMware. If the sale goes through, it will be one of the biggest technology transactions ever. The Trump government denied Broadcom’s attempt to acquire rival chipmaker Qualcomm for more than $100 billion, citing national security concerns.