[German]There is an agreement from Broadcom with the management of the cloud and virtualization specialist VMware, to acquire VMware (if the competition authorities approve). Broadcom confirmed this in an announcement dated May 25, 2022. The purchase price is expected to be around 61 billion US Dollar.
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This week there have been rumors about negotiations between Broadcom and VMware do do an qcquirement. In this announcement, Broadcom Inc. and VMware, Inc. confirm the agreement in principle regarding the acquisition.
Deal for 61 billion US dollars
Broadcom will acquire all of VMware's outstanding shares in a cash and stock transaction. Based on the closing price of Broadcom common stock on May 25, 2022, this purchase will be valued at approximately $61 billion. In addition, Broadcom will assume $8 billion of VMware's net debt.
This is the second largest acquisition this year. Only Microsoft's purchase of Blizzard Inc. for the incredible sum of $68.7 billion is higher.
Broadcom and VMware
Broadcom Inc. is an American designer, developer, manufacturer and global supplier of a wide range of semiconductor and infrastructure software products. Broadcom's product offerings serve the data center, networking, software, broadband, wireless, and storage and industrial markets. Founded in 2005, the company has 19,000 employees and 2019 annual revenue was $22.5 billion. Broadcom has been buying into various security and software companies for some time. For example, the software company CA Technologies was acquired in 2018, and at the end of 2019 there was the acquisition of the enterprise division Symantec. This acquisition in particular ended in chaos for Symantec business customers, as I explain in several posts linked at the end of the article.
VMware Inc. is a U.S. company founded in 1998 with the goal of developing a technology to abstract physical computer systems based on an x86 processor architecture with the help of software and to map the properties of a computer system virtually. The company is now a provider of software solutions in the field of cloud computing as well as virtualization and has almost 34,00 employees, with a turnover of about 11.8 billion US dollars. Michael Dell holds around 40% of VMware shares.
Broadcom becomes VMware
Upon completion of the transaction, Broadcom Software Group will operate under the VMware name and integrate Broadcom's existing infrastructure and security software solutions into an expanded VMware portfolio. Broadcom management expects to benefit enterprise customers by combining Broadcom's complementary software portfolio with the VMware product line. The intention is to provide enterprise customers with an expanded platform of critical infrastructure solutions.
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Let's hope that this doesn't go the way of the Symantec takeover with the VMware (virtualization) products. Reuters quotes Keith Townsend, an analyst at consulting firm CTO Advisor, as saying that Broadcom is not known for spending a lot of money on research and development. That could have a negative impact on VMware's new product launches, said Townsend, who also spent a short time at VMware as an enterprise data center architect. "When I talk to customers, they realize they desperately need innovation from companies like VMware," he is quoted as saying.
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