26/05/2022 18:05
Broadcom buy VMware in a cash and stock transaction for value of 61 billion dollars.
The deal represents one of the largest technology acquisitions of all time, along with the Microsoft for the purchase of $ 69 billion Activision Blizzard (currently on standby) and the purchase of Dell’s $ 67 billion EMC in 2016.
Broadcom shares rose 3% in the first few hours after the companies’ official announcement, while VMWare continued up 2%.
The deal requires VMware shareholders to receive $ 142.50 in cash or 0.2520 shares of Broadcom for every share of the company, Broadcom will bear the 8 billion of debt by VMware. Once the transaction is complete (expected in Broadcom’s next fiscal year), Broadcom shareholders will control 88% of the company and the current VMware shareholders the remainder 12%. With the purchase of VMware the chip colloss aims to strengthen itself in a highly specialized sector considered fundamental for the future.
Broadcom purchases
Broadcom’s purchase of VMware will help the company diversify its core business of designing and selling semiconductors into enterprise software, which can have higher margins. VMware products are used by companies to manage their servers and cloud servers more efficiently.
Broadcom is the semiconductor company with the most acquisitions and has strategically used mergers to fuel its growth in recent years. It purchased CA Technologies for $ 18.9 billion in 2018 and in 2019 Symantec per 10.7 billion dollars.
In March, the CEO of Broadcom, Hock Tan, had already hinted that there might be some purchases in 2022 stating that the company had “The ability to make a good sized acquisition”.
Meanwhile, let’s recall Broadcom’s desire to buy one of its rivals, Qualcomm, in 2018 per 117 billion dollars before the deal was thwarted byTrump administrationwhich cited national security issues.