The announcement of Broadcom’s purchase of VMware came in May 2022, with the original plan to close the deal in fiscal 2023. The staggering $61 billion acquisition will be financed by Broadcom through a combination of cash and its own stock, split evenly in a 50/50 arrangement. This deal places Broadcom’s acquisition just behind the record-holding Dell and EMC ($67 billion) and the ongoing Microsoft/Activision Blizzard ($68.7 billion) deal, which is still in the process of finalization. In fact, it is possible that Microsoft could complete the ActiBlizz acquisition as early as the coming days.
The European Commission’s conclusion was that Broadcom had limited opportunities to abuse its dominant market position, and that certain measures would be implemented to ensure healthy competition in the future. The Commission found no evidence of Broadcom holding a “strong position” that could impede competition in the networking and storage market, nor did it find any indications of Broadcom restricting cooperation with AMD and NVIDIA. The association of VMware with Broadcom software was also deemed unrealistic, unlike the motivation to limit compatibility of Fibre Channel adapters with VMware products as a means to squeeze rival Marvell. To address this concern, the EU regulator has required Broadcom to provide third-party companies with driver source code and tools to create compatible Fibre Channel adapters. This move aims to ensure that companies can confidently ensure their hardware works seamlessly with VMware’s server virtualization technologies.
Broadcom had already secured approvals for the acquisition of VMware in several countries, including Australia, Canada, and South Africa. However, the deal is still undergoing review by two highly scrutinous regulators: the US Federal Trade Commission (FTC) and the UK’s Competition and Markets Authority (CMA).
The significance of Broadcom’s acquisition of VMware cannot be overstated, potentially bolstering Broadcom’s software business and positioning it as a direct competitor to Qualcomm. VMware, previously owned by Dell until its separation in 2021, specializes in cloud computing and virtualization technology, holding a prominent position as a leading provider of virtual machines alongside its rival, Citrix.
Broadcom is a well-established semiconductor giant, with its chips widely used in Apple and Google smartphones, as well as in Wi-Fi/Bluetooth adapters found in various devices. The importance of this agreement cannot be emphasized enough, as it has the potential to greatly impact the IT landscape. Once VMware and Broadcom merge, the combined teams are expected to concentrate on enterprise software organization, particularly IT infrastructure and cloud computing.
Broadcom has been actively acquiring assets in recent years. In 2018, it acquired security and database software maker CA Technologies for $18.9 billion, followed by the acquisition of Symantec’s enterprise security division for $10.7 billion in 2019. Less than a year later, Broadcom sold Symantec’s business to Accenture, although the financial details of the transaction were not disclosed. Additionally, Broadcom made several attempts to acquire its competitor Qualcomm, but the deal was ultimately blocked by then-President Donald Trump due to concerns related to national security risks.
