Broadcom buys VMware software maker for $ 61 billion

Broadcom buys VMware software maker for $ 61 billion


(Reuters) – Broadcom announced on Thursday that it has bought cloud computing service provider VMware for $ 61 billion (€ 56.9 billion) in cash and stocks, the world’s largest incursion into professional software.

If successful, the operation would be the world’s second-largest acquisition since the beginning of the year after the January acquisition of video game designer Activision Blizzard by Microsoft for $ 68.7 billion.

Broadcom’s offer of $ 142.50 per share of VMware represents about a 49% premium at the end of May 20, just before news of the talks between the two groups began to spread in the press.

VMware shareholders will be able to withdraw either this amount in cash or 0.2520 Broadcom shares for each security of the software company they hold.

In pre-open trading on Wall Street, Broadcom’s shares fell about 1%, while VMware gained 1.3%, which has risen sharply since the first rumors appeared on the market.

The acquisition would nearly triple Broadcom’s software operations, a subsidiary that would account for nearly 45% of its total revenue.

According to Daniel Newman, an analyst at Futurum Research, Broadcom will be “immediately recognized as a major software player” by the acquisition of VMware.

“Having a company like VMware that is well established will open up [pour Broadcom] “a significant number of doors, which are probably closed to him with his current portfolio,” added the analyst.

The agreement is also a godsend for Dell Technologies CEO Michael Dell a few months after the actual split between VMware and the IT group, its parent company. Michael Dell owns a 40% stake in VMWare and the Silver Lake Private Equity Fund 10%. Under the agreement, VMware can acquire additional potential acquirers for a period of 40 days.

After a failed hostile bid for rival Qualcomm in 2018, Broadcom showed increased interest in software space by acquiring CA Technologies for $ 18.9 billion and Symantec Cybersecurity for $ 18.9 billion, $ 10.7 billion.

The group also considered acquiring SAS analytics software, but did not proceed. VMware dominates the market with so-called virtualization software, which allows customers to run multiple applications on their servers.

(Report by Chavi Mehta in Bangalore, Krystal Hu in New York and Jane Lanhee Lee in San Francisco; French version by Laetitio Volga, edited by Bertrand Boucey)


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