Broadcom eyes up multi-billion dollar deal for VMware

Date:
Mon, 23 May 2022 11:24:56 +0000

Description:
Broadcom reportedly considering $40bn deal to acquire VMware.

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The technology industry could be set for its next huge M&A deal after a Bloomberg report, corroborated by Reuters and others, suggests that Broadcom is in talks to acquire VMware.

The sources Bloomberg spoke to caution that "discussions are ongoing and theres no guarantee they will lead to a purchase". VMware is currently valued at around $40 billion on public markets, although its stock has risen considerably on news of this deal, giving the company a market cap of around $46 billion.

Acquiring VMware would represent the latest in a series of acquisitions for Broadcom, which is valued at around $222 billion. VMware deal

For its part, VMware was spun off by Dell in a $64 billion deal in November 2021, creating an independent company focused on virtualisation and cloud tools.

Broadcom predominantly focuses on hardware, making components for the iPhone, industrial equipment, and much more. It is, in this sense, an old school conglomerate.

But the company has been increasingly focused on data centres and acquiring VMware offers the company a chance at making both the hardware and software for the cloud's infrastructure.

Both VMware and Broadcom had no comment for Bloomberg . Diversification

As you can imagine for a chip company, the global chip supply shortage has been difficult for Broadcom.

A Bloomberg report from October 2021 said Apple had been forced to cut iPhone 13 production targets by 10 million units in part due to a shortage of Broadcom components.

Research showed that chip lead times at Broadcom grew from 12.2 weeks in February 2020 to 22.2 weeks in March 2021, reflecting broader struggles in
the industry. READ MORE

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From this perspective, buying VMware makes a lot of sense: it is a software business, meaning that margins and profits remain largely unaffected by macro trends in supply chains.

Broadcom's recent $20 billion bid for SAS, which sells business intel and
data management software, fell through at the final hurdle, perhaps creating an appetite for a mega deal. Find the ultimate tools with the best cloud hosting services



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Link to news story: https://www.techradar.com/news/broadcom-eyes-up-multi-billion-dollar-deal-for- vmware/


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