Broadcom has said it will acquire cloud computing company VMware in a US $ 61 billion ($ 86 billion) cash and stock deal, the chip maker’s biggest and boldest bid to diversify its business in business software.
Key points:
- The deal is Broadcom’s second largest acquisition since its failed attempt by Qualcomm in 2018
- It will give Broadcom access to customers and data centers in the VMware cloud
- The deal is expected to be completed in Broadcom’s fiscal year 2023
The purchase announced on Thursday is the second largest in the world so far in 2022, following Microsoft’s $ 68 billion ($ 97 billion) purchase from video game maker Activision Blizzard.
VMware shareholders will receive $ 142.50 ($ 201.33) per share with the purchase, a premium of nearly 49 percent until the stock closes on May 22, when it was first reported. time of the talks on the agreement.
Broadcom will take on $ 8 billion ($ 11 billion) in net debt from VMware, the company said.
Broadcom shares rose 1.6 percent in pre-market trading, while VMWare fell nearly 1 percent.
Broadcom CEO Hock Tan said the company is seeing the company’s spending “on fire.”
Purchasing VMware would give Broadcom customers access to the software company’s cloud and data centers, and could help it further capitalize on this trend.
The software became a substantial part of Broadcom’s business after it acquired CA Technologies for nearly $ 27 billion in 2018 and Symantec’s security division for $ 15 billion in 2019.
VMware’s bid to buy is Broadcom’s second largest acquisition attempt, after its failed attempt to buy the giant Qualcomm smartphone chip for nearly $ 150 billion in 2018.
The Broadcom software group will change the brand and function as VMware once the transaction is closed.
Michael Dell is the president of VMware and owns 40.2% of the company’s outstanding shares.
Broadcom’s current shareholders are expected to own approximately 88% and VMware’s current shareholders will own about 12% of the combined company.
The boards of directors of both companies have approved the agreement, which is expected to be completed in fiscal year 2023 for Broadcom.
Reuters