Broadcom will acquire VMware for 61 billion

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Broadcom Inc. Acquisition plans announced on Thursday VMware A cash and stock transaction worth $ 61 billion, the weekend report confirmed rumors that the two companies were in acquisition talks. The deal represents a premium of 32% above the average stock price of VMware before the rumors. Broadcom expects to complete the transaction in its 2023 fiscal year, subject to closing conditions.

Hawk Tan, president and CEO of Broadcom, said the acquisition would help Broadcom “rethink what we can deliver to customers as a leading infrastructure technology company.”

In fact, Broadcom’s revenue changed fundamentally after the transaction was completed. VMware reported $ 11.8 billion in revenue last year. This dwarfed the $ 7.07 billion in revenue reported by Broadcom’s own enterprise software group, which, according to the company, will be renamed VMware.

Raghu Raghuram, CEO of VMware, says, “Combining our resources and talented team with all of Broadcom’s existing enterprise software portfolios under the VMware brand creates a remarkable enterprise software player.”

With VMware joining Broadcom, 49% of its annual revenue will come from enterprise software. Broadcom last expanded its growing enterprise software portfolio in 2019 with a mant 10.7 billion acquisition (and subsequent sale to Accenture) of Symantec’s enterprise security software business. Broadcom acquired security and database software company CA Technologies in 2018 for 18.9 billion. It was also in 2018 that Broadcom tried unsuccessfully to seize rival Qualcomm, which was eventually rejected by the Trump administration.

Under the terms of the agreement, already agreed by both the company’s board and 40.2% shareholder Michael Dale and 10% owner equity firm Silver Lake, VMware shareholders will choose to receive V 142.50 in cash or 0.2520 shares of Broadcom common stock for each VMware share. . Broadcom has borrowed 8 billion from VMware. Broadcom noted that it had pledged $ 32 billion in loan financing to make the deal happen.

Founded in the late 1990’s, VMware is a pioneer in the virtualization market. Its virtualization and hypervisor software is widely used in enterprise IT to enable virtual machines to work on servers. And while its spinoff from Dell was only last year, it’s mostly the same for VMware, which has seen a few different corporate owners from the start.

After gaining momentum through initial work, VMware was acquired by EMC Corporation in 2004 for 635 million. The company sat there until 2016, when Dell acquired VMware as part of its $ 67 billion EMC acquisition: one of the largest enterprise mergers in history at the time.

Dell shuts down VMware again in 2021. The company was valued at about $ 40 billion at the time. VMware reported $ 12.85 billion for FY2022, up 9% year-on-year, and GAAP reported āĻ† 1.82 billion in net income for the same period. Revenue from subscription licenses and software as a service (SaaS) was a bright point on the company’s annual balance sheet – $ 6.33 billion, an increase of 13% year-over-year.

VMware added containerized workload support in 2019 and has since entered telecom with products such as its own telco cloud platform. In April, VMware announced that it was validating Ericsson’s 5G Core to run on the Telco Cloud platform. Validity will ensure that VMware’s platform can onboard and host Ericsson’s 5G Core Cloud Native Functions (CNFs), it said. Along with the telco cloud platform RAN, there is also a demand for VMware in the open RAN / vRAN market. The company counts companies like Dish Network, Vodafone and Italian operator TIM among its open RAN customers.

VMware has gone to meet the growing enterprise demand for seamless hybrid cloud and multi-cloud deployments: a point VMware supports all major public cloud vendors and has partnerships with many others around the world. This new enterprise software with Broadcom will help clients navigate multi-cloud deployments, says Raghuram of VMware.

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