Broadcom Agrees to Buy VMware for $61B, Boosting Software Prowess

Chipmaker Broadcom Thursday was the official announcement by Microsoft of its intent to buy a cloud management company VMware a cash-and-stock transaction worth $61 billion.

Broadly, the deal would be one of the biggest in the technology space in years, sitting alongside the likes of Dell’s purchase of EMC (VMware’s former owner) for $67 billion in 2015, and Microsoft’s $68.7 billion bid for video game company Activision Blizzard

Broadcom’s stock closed up 3.5% on Thursday, while VMware shares ended the day up 3.1%.

In a press statement seen by TechEconomy, Broadcom explained the benefits of the transaction this way: “By bringing together the complementary Broadcom Software portfolio with the leading VMware platform, the combined company will provide enterprise customers an expanded platform of critical infrastructure solutions to accelerate innovation and address the most complex information technology infrastructure needs.

The combination of these solutions will give customers, including industry leaders, more choice and flexibility to build and run, manage, connect, protect and connect applications at scale across diverse, distributed environments. This includes the data center, any cloud and 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.”

As Reuters noted, Broadcom’s offer price of $142.50 per VMware share represents a premium of nearly 49% compared with VMware’s share price earlier this week during early rumors of the deal. After the announcement, shares in both companies rose slightly in mid-morning trades Thursday.

The transaction is subject to a caveat. Although it is expected to close early next year (or earlier), VMware can solicit offers from companies up to July 5.

Broadcom will immediately be recognized as a major software company with the acquisition VMware, Futurum Research analyst Daniel Newman said.

“Having something like VMware … will have a significant number of doors open that their current portfolio probably doesn’t open for them,” Newman added.

Get latest news from African Startup ecosystem

Latest stories

You might also like...