Broadcom Finally Completes The Acquisition Of VMware!

After much ado, Broadcom has finally completed its purchase of VMware for $69 billion! #Nice

Yes, the deal finally got regulatory approval from China, the last major market pending to provide approval. (read more)

Before we get into the latest details, let’s do a quick recap.
 

What Happened To The Deal Previously?

 

• Having originally proposed the deal in May 2022, Broadcom had to delay its closing dates three times as the deal faced tough scrutiny the world over. 

• In fact, in true action movie style, it took almost to the last minute to complete the deal, as Broadcom would be subject to pay a $1.5 billion termination fee as per the agreement if the deal wasn’t complete before November 26, 2023.

• The $69 billion deal includes $61 billion in cash and stock, while $8 billion is believed to be used to offset VMware’s net debt.

• Recently, Broadcom shared a financial news release saying that the deal received legal merger clearance in Australia, Brazil, Canada, the European Union, Israel, Japan, South Africa, South Korea, Taiwan and the United Kingdom, which faced its own set of challenges (read more). This also included foreign investment control clearance in all necessary jurisdictions.

• While awaiting final approval from China, Broadcom even conducted an election for shareholders to decide what kind of consideration they wanted. The results showed that 96% of them wanted Broadcom shares rather than cash at the rate of $142.5 per share.

 
   

What’s Broadcom’s Plan With VMware Now?

 

• In a financial release, Broadcom, a global technology leader that designs, develops and supplies semiconductor and infrastructure software solutions, said it has completed the acquisition of VMware.

• In the same release, it also mentioned that “VMware's common stock will now cease to be traded on the New York Stock Exchange (NYSE).”

• While no actual release was made regarding what’s going to happen with VMware, based on the company website’s executive page, it’s believed that VMware will be divided into 4 parts.

• The Application Networking and Security Division will be led by Umesh Mahajan (Vice President and General Manager). The Tanzu Division will be led by Purnima Padmanabhan (Vice President and General Manager). The VMware Cloud Foundation Division will be led by Krish Prasad (Senior Vice President and General Manager). The Software Defined Edge Division will be led by Sanjay Uppal (Vice President and General Manager).

• The four division leaders held similar positions at VMware prior to the merger.

• The CEO of VMware prior to Broadcom’s acquisition, Raghu Raghuram conveyed through a LinkedIn post that he would step down as CEO and plans to “take a short break, rejuvenate, and then find a new and impactful mission.”

• Raghuram will, however, continue his association with VMware as a strategic advisor to Hock Tan, the President and CEO of Broadcom.

 

What Did Hock Tan Say?

 

• Hock Tan, President and CEO of Broadcom, said, “We are excited to welcome VMware to Broadcom and bring together our engineering-first, innovation-centric teams as we take another important step forward in building the world's leading infrastructure technology company.

• [Contd.] With a shared focus on customer success, together we are well positioned to enable global enterprises to embrace private and hybrid cloud environments, making them more secure and resilient. 

• [Contd.] Broadcom has a long track record of investing in the businesses we acquire to drive sustainable growth, and that will continue with VMware for the benefit of the stakeholders we serve.”

Do you think Broadcom’s acquisition will inspire other companies to follow suit and diversify their portfolios? Do you think such acquisitions are bad for competition and fair-trade practices?

Let us know in the comments below!