What you need to know
- Broadcom announced plans to acquire VMware for a deal worth $61 billion.
- The move is the second-largest technology acquisition of this year, only trailing Microsoft's planned purchase of Activision Blizzard.
- As part of the deal, Broadcom will take on $8 billion of VMware's debts.
Broadcom will acquire VMware in a deal worth $61 billion. The companies announced the news on Thursday, May 26, 2022. The planned purchase is the second-largest technology acquisition of the year, trailing only Microsoft's deal to obtain Activision Blizzard for just under $70 billion.
The purchase will be made with a combination of cash and stocks valued at $61 billion. The deal's value was bolstered by Broadcom's offering price of $142.50 per VMware share, which is a premium of almost 49% (via Reuters).
VMware specializes in enterprise software. It also makes the best virtual machine software for Windows 10 and Windows 11. Its acquisition will bolster Broadcom's software efforts significantly.
"The combined solutions will enable customers... to build, run, manage, connect and protect applications at scale across diversified, distributed environments, regardless of where they run," said Broadcom in its announcement.
Broadcom, under the leadership of CEO Hock Tan, has aggressively expanded through mergers and acquisitions over the years.
"Building upon our proven track record of successful M&A, this transaction combines our leading semiconductor and infrastructure software businesses with an iconic pioneer and innovator in enterprise software as we reimagine what we can deliver to customers as a leading infrastructure technology company," said Tan.
The announced acquisition will also prove profitable for Dell CEO Michael Dell. VMware was sput out from Dell in 2021, but Dell's chief executive still owns a 40% stake in VMware. Reuters noted that private equity firm Silver Lake, which backs Mr. Dell, owns 10% of VMware.
In 2018, Broadcom had plans to purchase Qualcomm for $117 billion, but that deal was ultimately held back by then-president Donald Trump. The former president pointed to national security issues when discussing the planned purchase.
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