Broadcom to acquire VMware for US$61bn

Broadcom, a global technology leader that designs, develops and supplies semiconductor and infrastructure software solutions, and VMware, an innovator in enterprise software, have announced an agreement under which Broadcom will acquire all of the outstanding shares of VMware in a cash-and-stock transaction that values VMware at approximately US$61 billion ($85 billion) based on the closing price of Broadcom common stock on 25 May 2022. In addition, Broadcom will assume $8 billion ($11.15 billion) of VMware net debt. Following the closing of the transaction, the Broadcom Software Group will rebrand and operate as VMware, incorporating Broadcom’s existing infrastructure and security software solutions as part of an expanded VMware portfolio.

VMware, a provider of multi-cloud services for all apps, pioneered virtualisation technology — an innovation that arguably transformed x86 server-based computing. VMware then created the software-defined data centre and played a leading role in virtualising networking and storage, before evolving to become a hybrid cloud and digital workspace leader. Today the company’s multi-cloud portfolio, spanning application modernisation, cloud management, cloud infrastructure, networking, security and anywhere workspaces, forms a flexible, consistent digital foundation on which some of the largest and most dynamic enterprises across industries build, run, manage, connect and protect their most important and complex workloads.

By bringing together the Broadcom Software portfolio with the VMware platform, the combined company will provide enterprise customers with an expanded platform of critical infrastructure solutions to accelerate innovation and address complex information technology infrastructure needs. The combined solutions should offer customers, including leaders in all industry verticals, greater choice and flexibility to build, run, manage, connect and protect applications at scale across diversified, distributed environments, regardless of where they run: from the data centre to any cloud and to edge computing.

“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 Broadcom President and CEO Hock Tan.
“We look forward to VMware’s talented team joining Broadcom, further cultivating a shared culture of innovation and driving even greater value for our combined stakeholders, including both sets of shareholders.”

VMware CEO Raghu Raghuram added, “VMware has been reshaping the IT landscape for the past 24 years, helping our customers become digital businesses. We stand for innovation and unwavering support of our customers and their most important business operations and now we are extending our commitment to exceptional service and innovation by becoming the new software platform for Broadcom. Combining our assets and talented team with Broadcom’s existing enterprise software portfolio, all housed under the VMware brand, creates a remarkable enterprise software player. Collectively, we will deliver even more choice, value and innovation to customers, enabling them to thrive in this increasingly complex multi-cloud era.”

The transaction, which is expected to be completed in Broadcom’s fiscal year 2023, is subject to the receipt of regulatory approvals and other customary closing conditions, including approval by VMware shareholders.

Image credit: ©stock.adobe.com/au/NicoElNino

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