Broadcom set to acquire VMware

Broadcom Inc. is in discussions to buy VMware Inc., a cloud-computing firm backed by billionaire Michael Dell, in a mega technology acquisition that would move the chipmaker into a highly specialised field of software.

The sources indicated that negotiations between Broadcom and VMware are underway and that a transaction is not imminent. The terms of the deal are still not known. The $50 billion deal would turn the semiconductor giant into a tech conglomerate with products spanning from semiconductors to cloud computing.

The bid for VMware would be one of the most significant technology acquisitions ever. Even as the general rate of dealmaking slows from 2021’s record pace, the sector has been one of the silver linings for bankers in recent months. According to Refinitiv statistics, Michael Dell is VMware’s largest stakeholder, holding a 40% interest after Dell Technologies Inc handed out VMWare to its stockholders last year. Private equity company Silver Lake, which previously invested in Broadcom, is VMware’s second-largest stakeholder with a 10% holding.

Broadcom Chief Executive Officer Hock Tan has established one of the largest and most diverse semiconductor businesses in the market, and this merger would continue his acquisition spree. Broadcom bought CA Technologies in 2018 and Symantec Corp.’s corporate security unit in 2019. The software sector has been a primary focus in recent years.

Following its $18.9 billion acquisition of CA Technologies and its $10.7 billion acquisition of Symantec Corp’s security division in the previous four years, it would diversify Broadcom’s portfolio away from semiconductors and toward enterprise software. The agreement was initially reported by Bloomberg News late Sunday. Broadcom and VMware did not reply to queries for comment from Reuters right away. VMware’s market value was $40.3 billion as of Friday’s market closing.

According to Bloomberg data, global acquisitions of technology businesses are up 46% this year to $263 billion. The total was boosted by Microsoft Corp.’s $69 billion purchase of video game producer Activision Blizzard Inc. in January. Citrix Systems Inc. is being bought for $13 billion by a consortium led by Vista Equity Partners, while Elon Musk unveiled a $44 billion offer for Twitter Inc. last month.

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