Chipmaker Broadcom to buy VMware in $61 Billion deal

Broadcom Inc will now be acquiring cloud and virtualization company VMware in a cash and stock deal valued at around $61 billion.

Broadcom’s Software Group, which provides infrastructure and security solutions, will also be rebranded and merged within VMware.

With this deal, Broadcom will also take over $8 billion of VMware's net debt.

Hock Tan, President and Chief Executive Officer of Broadcom, said, "Building upon our proven track record of successful M&A, this transaction combines our leading semiconductor and infrastructure software businesses with an iconic pioneer and innovator in enterprise software as we reimagine what we can deliver to the customers as a leading infrastructure technology company. We look forward to VMware’s talented team joining Broadcom, further cultivating a shared culture of innovation and driving even greater value for our combined stakeholders, including both sets of shareholders."

Raghu Raghuram, Chief Executive Officer of VMware, said, "VMware has been reshaping the IT landscape for the past 24 years, helping our customers become digital businesses. We stand for innovation and the unwavering support of our customers and their most important business operations, and now we are extending our commitment to exceptional service and innovation by becoming the new software platform for Broadcom. 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."

This is the second biggest deal of the year 2022 after the Microsoft $68.7 billion acquisition of Activision Blizzard that was announced in the month of January.

The VMware deal will boost Broadcom's footing in enterprise software, particularly the hybrid cloud, a fast-growing segment with higher margins.

Under the agreement with Broadcom, VMware shareholders will elect to receive either $142.50 in cash or 0.2520 shares of Broadcom common stocks for each VMware share.