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Chipmaker Broadcom Negotiating With Vmware For An Acquisition; Reports


24/05/2022


Chipmaker Broadcom Negotiating With Vmware For An Acquisition; Reports
Chip making giant Broadcom Inc is currently holding negotiation to acquire cloud service provider VMware Inc, said report quoting sources with knowledge of the matter. If this deal goes through, it would help turn the chipmaker into a diversified tech company.
 
The sources quoting in the reports indicated that negotiations between Broadcom and VMware are underway and that a transaction is not imminent. The terms of the contract being considered are unknown.
 
Broadcom creates processors for everything from mobile phones to telecom networks, but acquiring VMware would offer them access to data centres, where VMware's technology is a cornerstone for cloud customers.
 
"We believe an acquisition of VMware would be considered as making strategic sense; consistent with Broadcom's focus on building out a deepening enterprise infrastructure software strategy," Wells Fargo analysts said.
 
Since taking the head of what was once a modest chipmaker in 2006, Broadcom CEO Hock Tan, a Malaysian-American millionaire, has been a prolific dealmaker. Acquisitions on a regular basis let the company grow into a $200 billion giant.
 
Tan's most daring move came in 2017, when he attempted to buy Qualcomm for $103 billion. President Donald Trump vetoed it, citing fears that it would give China an advantage in mobile communications.
 
Broadcom relocated its headquarters from Singapore to San Jose after the unsuccessful attempt. It then bolstered its software offering by paying $18.9 billion for CA Technologies and $10.7 billion for Symantec's security division. VMware is worth $40 billion on the stock market.
 
"A VMware acquisition would just about triple the size of Broadcom's software segment, as well as bring the overall software mix close to 50% for the combined company," Bernstein analysts wrote in a note to clients.
 
The deal was initially reported by Bloomberg News late Sunday last week. Broadcom and VMware did not reply to calls for comment from Reuters right away.
 
After VMware was carved off of Dell Technologies last year, Michael Dell became the company's largest investor, with a 40 per cent interest. If the deal went through, he'd be in line for a windfall.
 
(Source:www.financialtimes.com)