Broadcom is on the cusp of finalizing its $61 billion takeover of VMware, marking the third-largest deal in IT history, following in the footsteps of Dell/EMC and Microsoft/Activision Blizzard mega-mergers.
Broadcom’s acquisition journey began in May 2022 when it announced its intention to acquire VMware, and the company is now on the brink of sealing the deal in fiscal 2023. The semiconductor juggernaut is poised to finance the takeover through a 50/50 split between cash and its own shares.
Under the terms of this historic agreement, VMware shareholders are set to receive a handsome $142.50 in cash or 0.2520 Broadcom shares for each VMware share they hold. This offer stands as a remarkable 44% premium over VMware’s share price as of the initial announcement in May, and a notable 32% higher than VMware’s weighted average share price over the previous 30 days.
While the deal is valued at a staggering $61 billion, some sources even speculate a higher figure of $69 billion when factoring in the additional $8 billion of net VMware debt that Broadcom will assume.
Broadcom’s recent statement reiterates its commitment to closing the VMware deal promptly, with the deadline set for November 26. This announcement aims to reassure investors and alleviate concerns regarding potential delays resulting from Chinese regulatory scrutiny. Notably, Broadcom has already secured approvals from regulators in the EU, the UK, and several other countries, with Chinese regulatory approval being the final significant hurdle.
However, no official specifics have been provided regarding the progress of approvals from Chinese regulators. Recent reports indicate that China’s antitrust regulators may take additional time due to tightened U.S. sanctions on chip exports, a development that led to a dip in VMware shares below the deal offer.
This deal carries immense significance in the tech world, not only due to its monumental value but also for its potential to shape the future of Broadcom and the broader industry. The acquisition is expected to bolster Broadcom’s software business significantly and strengthen its foothold in the networking and storage markets.
It’s worth noting that Broadcom’s acquisition history has been nothing short of impressive. In recent years, the company acquired key players such as CA Technologies and Symantec, demonstrating its commitment to expansion and diversification. Moreover, Broadcom’s attempts to acquire Qualcomm, its rival, were thwarted by national security concerns, underscoring the high stakes in the tech industry’s consolidation game.