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Broadcom reportedly looking at acquiring cloud company VMware

Chipmaking giant is hoping to solidify its software base to give it more flexibility in targeting the data centre market

The chipmaker Broadcom is reportedly in talks to acquire cloud computing company VMware.

Negotiations between the two companies are ongoing and a deal isn’t imminent, according to a Bloomberg report. The deal terms being discussed are unknown for now.

The acquisition would help further diversify Broadcom’s business away from semiconductors and into enterprise software. In the last four years, it acquired CA Technologies for $18.9 billion and Symantec’s security division for $10.7 billion.

Broadcom makes a range of electronics, with its products used in devices like the iPhone or industrial equipment. However, as data centres have become increasingly important, the company increasing its software offering will give it more ways to target this market.

Last year, it held talks to acquire software company SAS Institute, valued at $15 to $20 billion, but the discussions ended without a deal.

The company also aimed to take over rival chipmaker Qualcomm but was forced to walk away from the deal in 2018 after meeting resistance from the Trump administration. One of the concerns around the deal was that Broadcom’s headquarters was based in Singapore. Since then, it has switched to the US and has its headquarters based in San Jose, California, 20 miles away from VMware’s Palo Alto headquarters.

VMware was acquired by storage technology giant EMC in 2004. EMC was then acquired by Dell in 2016 and VMware spun off from the hardware giant last year.

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Michael Dell and private equity firm Silver Lake are reportedly the top investors of VMware. Dell holds a 40% stake following the spin-off while Silver Lake, which has previously invested in Broadcom, holds a 10% stake, according to Reuters.

IT Pro has contacted Broadcom and VMware for comment.

VMware completed its spin-off from Dell to become a standalone company once again in November 2021. This helped Dell to raise money to pay off its debts while VMware could look forward to more business flexibility. The hardware giant shed its 81% equity ownership in the company, which created an independent company with a stock market value of around $64 billion.

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