Billion dollar deal: Broadcom acquires VMware
Broadcom acquires VMware for $61 billion
Billion-dollar deal in the US tech industry: Broadcom continues its shopping spree and now wants to swallow Dell’s former software subsidiary VMware. It would be the largest acquisition by a chip group to date. Shareholders and regulators have yet to approve the deal.
The chip group Broadcom wants to strengthen its software business with the acquisition of the cloud specialist VMware. Broadcom is offering $142.5 per share, the companies said on Thursday. This would value VMware at a total of around 61 billion US dollars (57 billion euros). Broadcom is also taking on eight billion US dollars in debt from VMware. The deal is expected to close in Broadcom’s next financial year.
VMware specializes in cloud-based software for companies and was majority owned by the US computer group Dell Technologies until its spin-off last year. Its founder Michael Dell and the investment company Silver Lake, which still holds 40.2 and 10 percent of VMware, are also behind the transaction, the statement said. Broadcom gives VMware shareholders the choice of receiving the purchase price in cash or in treasury shares.
With the largest acquisition of a chip group to date, Broadcom continues its shopping tour of recent years. Most recently, the focus was on software. In 2018, Broadcom acquired the company software provider CA Technologies for around 19 billion US dollars and the following year took over Symantec’s corporate security business. The VMware deal would once again significantly increase Broadcom’s software business to almost half of the Group’s revenues.
Broadcom is willing to pay a lot for the acquisition, which shareholders and regulators have yet to approve. The offer is 44 percent higher than VMware’s closing price on May 20, 2022, which was the last trading day before US media first reported on takeover negotiations. The official announcement of the deal on Thursday was no longer a big surprise on the financial market and was received calmly by investors. Broadcom’s shares were little changed in the pre-market and there was also little price movement at VMware at first.