Billion deal in the US tech industry: Broadcom is continuing its shopping spree and now wants to swallow Dell’s former software subsidiary VMware. It would be the largest takeover of a chip company to date.
The chip group Broadcom wants to strengthen its software business with the takeover of the cloud specialist VMware. Broadcom is offering $142.5 per share, the companies said. This would value VMware as a whole at around 61 billion dollars (57 billion euros).
Broadcom is also assuming $8 billion of VMware debt. The deal is expected to close in Broadcom’s next fiscal year. VMware specializes in cloud-based software for companies and was majority owned by the US computer group Dell Technologies until it was spun off last year. Its founder Michael Dell and the investment company Silver Lake, which still hold 40.2 and 10 percent respectively in VMware, are also behind the transaction, the statement said. Broadcom is giving VMware shareholders the choice of receiving the purchase price in cash or in their own shares.
Shopping spree at Broadcom
With the largest takeover of a chip group to date, Broadcom is continuing its shopping spree of recent years. Most recently, the focus was primarily on software. In 2018, for example, Broadcom took over the company software provider CA Technologies for around 19 billion dollars and the following year the corporate security business from Symantec. The VMware deal would again significantly increase Broadcom’s software business, to almost half of the group’s revenue.
Broadcom is paying dearly for the acquisition, which shareholders and regulators still need to approve. The offer is 44 percent above VMware’s May 20 closing price. That was the last day of trading before US media reported on takeover negotiations for the first time. The official announcement of the deal on Thursday was no longer a big surprise on the financial market and was received calmly by investors. Broadcom’s shares were little changed before the market and VMware’s price movements were also initially low.