Broadcom to buy VMware in second-biggest deal globally so far this year

Computer chip and software maker Broadcom is buying cloud services provider VMware Inc in a cash-and-stock deal valued at $61 billion to speed up its expansion into the enterprise software business. The purchase announced on Thursday is the second-biggest globally so far in 2022, after Microsoft Corp’s $68.7 billion buyout of video game maker Activision Blizzard Inc.

Here are 10 things to know about the Broadcom-VMware deal:

1. As part of the transaction, VMware shareholders can choose to receive either $142.50 in cash or 0.2520 shares of Broadcom common stock for each VMware share.
2. The cash-and-stock deal also includes $8 billion of VMware net debt.
3. The Broadcom Software Group will rebrand and operate as VMware once the transaction closes.
4. Broadcom shares were up 1.6% in premarket trading, while VMWare fell nearly 1%.
5. Michael Dell is VMware’s chairman and he owns 40.2% of the company’s outstanding shares.
6. Broadcom Chief Executive Officer Hock Tan had said the company is seeing that enterprise spending is “on fire”.
7. Buying VMware would give Broadcom access to the software firm’s cloud clients and their data centers, and will help it capitalize on this trend further.
8. Software became a substantial part of Broadcom’s business after it acquired CA Technologies for $18.9 billion in 2018 and Symantec’s security division for $10.7 billion in 2019.
9. The bid to buy VMware is Broadcom’s second-biggest takeover attempt, after its failed attempt to buy smartphone chip behemoth Qualcomm Inc for more than $100 billion in 2018.
10. It’s anticipated that current Broadcom shareholders will own approximately 88% and current VMware shareholders will own about 12% of the combined company. The boards of both companies have approved the deal, which is expected to be completed in Broadcom’s fiscal year 2023.

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