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UK extends probe into chip-maker Broadcom buying VMware

Britain on Wednesday deepened a probe into US semiconductor maker Broadcom’s planned takeover of cloud computing firm VMware, citing competition concerns.

Broadcom’s $61-billion offer “may be expected to result in a substantial lessening of competition” for goods and services in the UK, the Competition and Markets Authority (CMA) said in a statement.

It comes after the European Union in December launched its own in-depth probe into the deal over concerns it might stifle competition in the server sector.

The CMA will now conduct an in-depth or phase two investigation, after launching an initial probe last year into the massive tech merger bid.

Broadcom is seeking to expand into the software market to boost its server business and has already acquired two complementary firms, CA Technology and Symantec.

At the time of the cash-and-stock offer for VMware in May, Broadcom said it wished to offer customers “greater choice and flexibility to build, run, manage, connect and protect applications at scale”.

Under the transaction, VMware shareholders can elect to receive either $142.50 in cash or slightly more than one-fourth of a Broadcom share for each VMware share.

That represented a premium of almost 50 percent compared with VMware stock before news reports of the deal surfaced.

Broadcom will also assume $8 billion of VMware debt.

VMware was spun out of Dell Technologies in 2021. AFP

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