Broadcom agrees $69B VMware mega-deal

Broadcom struck a $69 billion deal to acquire cloud software company VMware in one of the largest US technology deals to date, as the chip maker advances an ongoing strategy to transform its business.

In a statement, Broadcom announced the proposed acquisition values VMware at approximately $61 billion based on the closing price of its stock on 25 May, and includes $8 billion in net debt.

The transaction is backed by $32 billion in bank financing and Broadcom expects to close in its fiscal 2023, which runs to end-October 2023, subject to regulatory approval and customary closing conditions.

Broadcom’s planned $69 billion outlay puts the deal on par with Microsoft’s pending purchase of Activision Blizzard and just behind Dell’s buy of EMC in 2016.

The chip company pushed into software in 2019, agreeing to buy Symantec for $10.7 billion. It has seemingly had cash to burn since an attempt to buy Qualcomm was blocked in 2018 over national security concerns.

Diversified technology company
Announcement of the deal comes days after reports Broadcom had commenced talks to buy the software group. The $61 billion price represents a 33 per cent premium on the value of VMware since news of the talks emerged.

Broadcom stated once the transaction closes, its Broadcom Software Group would rebrand and operate as VMware, incorporating its existing infrastructure and security software products as part of the expanded portfolio.

The tie-up taps into Broadcom’s ambitions to establish itself as a diversified technology company, ranging from its traditional chip business to cloud computing plays.

Hock Tan, president and CEO of Broadcom, stated said the planned purchase built on its “proven track record of successful M&A”, combining its business with “an iconic pioneer and innovator in enterprise software”.