Broadcom to acquire VMware in US$61 billion deal

Chipmaker Broadcom has announced a deal to acquire cloud computing firm VMware in one of the tech industry’s biggest ever acquisitions.

The US$61 billion agreement is the second-largest acquisition of the year following Microsoft’s US$68.7 billion deal for game publisher Activision Blizzard.

Broadcom is offering US$142.50 in cash or 0.2520 of a Broadcom share for each VMware stock. This represents a premium of nearly 49% to the stock’s close before talks were reported on May 22. 

The proposed deal will also see Broadcom assume US$8 billion debt from VMware.

Broadcom said that combining its software portfolio with VMware’s platform will provide customers with an expanded platform of critical infrastructure solutions across all industry verticals. 

Hock Tan, president and CEO of Broadcom, said: “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. 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.”

Raghu Raghuram, CEO of VMware, said: “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.”