Broadcom, is acquiring VMware, a cloud- and virtualization-focused software developer, in a $61 billion cash-and-stock deal

The chip giant, Broadcom, is acquiring VMware, a cloud- and virtualization-focused software developer, in a $61 billion cash-and-stock deal which is being termed as one of the biggest tech acquisitions ever after Dell’s $67 billion acquisition deal with EMC and Microsoft’s pending acquisition of Activision Blizzard for $68.7 billion. Michael Dell, Chairman of the VMware Board, said: “This is a landmark moment for VMware and provides our shareholders and employees with the opportunity to participate in the meaningful upside.”

Broadcom is acquiring VMware to diversify its business 

The new move of Broadcom acquiring VMware will help the company diversify away from its core business by folding Broadcom’s software division into VMware. “By bringing together the complementary Broadcom Software portfolio with the leading VMware platform, the combined company will provide enterprise customers with an expanded platform of critical infrastructure solutions to accelerate innovation and address the most complex information technology infrastructure needs. The combined solutions will enable customers, including leaders in all industry verticals, greater choice, and flexibility to build, run, manage, connect and protect applications at scale across diversified, distributed environments, regardless of where they run: from the data center, to any cloud, and to edge-computing. With the combined company’s shared focus on technology innovation and significant research and development expenditures, Broadcom will deliver compelling benefits for customers and partners,” the company said in its official announcement.

Hock Tan, President and Chief Executive Officer of Broadcom, said, “Building upon our proven track record of successful M&A, this transaction combines our leading semiconductor and infrastructure software businesses with an iconic pioneer and innovator in enterprise software as we reimagine what we can deliver to customers as a leading infrastructure technology company. We look forward to VMware’s talented team joining Broadcom, further cultivating a shared culture of innovation and driving even greater value for our combined stakeholders, including both sets of shareholders.”  It is pertinent to mention here that Broadcom had not made a large acquisition since 2019. In 2018, the company cut a deal for the acquisition of CA Technologies for USD 18.9 billion, and in 2019 Broadcom acquired the enterprise security business of Symantec Corporation for USD 10.7 billion.

Broadcom’s second-quarter earnings

According to analysts surveyed by Refinitiv, Broadcom posted quarterly adjusted earnings of $9.07 per share, ahead of consensus estimates of $8.70 per share. The Revenue grew 23% year over year to $8.1 billion, higher than Wall Street’s expected $7.9 billion. Broadcom’s stock closed up 3.5% on Thursday, while VMware shares ended the day up 3.1%. Hock Tan said in a statement; “Broadcom saw strength in its networking and server storage units during the second quarter. We expect this momentum to continue into the third quarter.”

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