Broadcom Inc. announced today that it would acquire all of VMware’s outstanding shares in a cash-and-stock deal valued at approximately $61 billion, based on Broadcom’s common stock closing price on May 25, 2022. Broadcom would also take up $8 billion of VMware’s net debt. This purchase, valued at $69 billion, is the second-largest of the year, behind Microsoft’s $68.7 billion acquisition of Activision.
Broadcom Inc. is a semiconductor and infrastructure software developer, producer, and worldwide supplier based in the United States. Broadcom’s product portfolio includes solutions for data centres, networking, software, internet, wireless, storage, and industrial applications. VMware, Inc. is a California-based cloud computing and virtualization technology firm. VMware was the first business to successfully virtualize the x86 architecture on a commercial scale.
VMware shareholders will receive $142.50 in cash or 0.2520 shares of Broadcom common stock for each VMware share under the terms of the agreement, which has been unanimously authorised by the boards of directors of both companies.
The total $138.23 per-share consideration, based on the closing price of Broadcom common stock on May 25, 2022, represents a 44 per cent premium to VMware common stock’s closing price on May 20, 2022, the last trading day prior to media speculation about a potential transaction, and a 32 per cent premium to VMware’s unaffected 30-day volume-weighted average price (VWAP).
VMware’s Chief Executive Officer, Raghu Raghuram, stated, “Combining our assets and talented team with Broadcom’s existing enterprise software portfolio, all housed under the VMware brand, creates a remarkable enterprise software player. Collectively, we will deliver even more choice, value and innovation to customers, enabling them to thrive in this increasingly complex multi-cloud era.”
Broadcom plans to conclude the acquisition in its fiscal year 2023, which ends on October 31, subject to regulatory clearance and typical closing conditions. Broadcom Software Group will rebrand and operate as VMware when the purchase closes, combining Broadcom’s existing infrastructure and security software products into an enlarged VMware offering.
The combined company will offer enterprise customers an expanded platform of critical infrastructure solutions to accelerate innovation and address the most complex information technology infrastructure needs by bringing together the complementary Broadcom Software portfolio with the leading VMware platform.
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