Broadcom formally confirms $61 billion acquisition of VMware

The rumoured acquisition of VMware from Broadcom has been confirmed today in a deal worth a reported $61 billion (£48.4 billion).

Rumours of a potential acquisition started surfacing on Monday though it was believed, at the time, that a deal was not imminent.

VMware shareholders can choose to receive either $142.50 (£113.11) in cash or 0.2520 shares of Broadcom common stock for each VMware share they hold, as part of the deal, according to the widely reported story from Associated Press.

Computer chip and software company Broadcom will operate under the VMware brand after the deal has closed. The cash-and-stock deal also includes $8 billion (£6.35 billion) of VMware’s net debt.

The acquisition is expected to close in Broadcom’s 2023 fiscal year after both companies’ boards approved the deal today.

The acquisition is one of the largest to have been confirmed in 2022. Market analysts have predicted that 2022 could see many large acquisitions in tech due to the weakening performance of technology stocks on Wall Street. Investors have shifted to safer options in recent months amid mounting inflation and a looming economic recession.

The acquisition of Broadcom will be seen as an attempt for the company to broaden its business and move further into the software market.

In the previous four years, Broadcom has made several acquisitions that signalled its business intentions.

It made an all-cash deal in 2018 with infrastructure software company CA Technologies worth a reported $18.9 billion (£15 billion), and later in 2020, it bought Symantec Enterprise Security for another all-cash deal worth $10.7 billion (£8.5 billion), though this division was bought by Accenture from Broadcom in the same year.

It also held talks with software firm SAS Institute last year but those discussions never materialised in a confirmed acquisition.

Broadcom also tried to take over rival chipmaker Qualcomm in 2018 but given the company’s Singapore headquarters, the Trump administration ended the discussions over security concerns.

Broadcom has since relocated to the US and its San Jose headquarters is located just 20 miles from VMware’s main office in Palo Alto.