Broadcom announces plans to purchase VMware

Hock Tan, chief executive of Broadcom

Martin H. Simone | Bloomberg | Getty Images

Broadcom I’ll buy Vmware in a cash and stock transaction valued at $ 61 billion based on the closing price of Broadcom common stock on May 25, 2022, the companies announced Thursday.

The deal would be one of the largest technology acquisitions of all time, behind Microsoftis awaiting a $ 69 billion purchase Activision Blizzard Other Dell$ 67 billion purchase of EMC in 2016.

Broadcom’s purchase of VMware will help the company diversify from its core semiconductor engineering and sales business to turn it into enterprise software, which can have higher margins. VMware products are used by enterprises to run their servers and cloud servers more efficiently.

Broadcom is the semiconductor company with the most acquisitions and has strategically used mergers to fuel its growth in recent years. It previously bought CA Technologies in 2018 for $ 18.9 billion and Symantec in 2019 for $ 10.7 billion.

But Broadcom hadn’t made a large acquisition since 2019. In March, Broadcom CEO Hock Tan said the company had “the ability to make a large acquisition.”

Broadcom planned to buy Qualcomm in 2018 for $ 117 billion before the deal was thwarted by then President Donald Trump, citing national security.

Vmware unbundled by Dell late last year in an effort to repay the debt. Dell originally acquired the company when it bought EMC in 2016. Michael Dell, CEO and founder of Dell, owns approximately 40% of VMware.

News of the deal jumped over the weekend, sending Broadcom shares down. VMWare shares were up more than 24% on Monday.

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