Broadcom announces plans to buy VMware

The two companies announced Thursday that Broadcom will buy VMware in a $61 billion cash and stock transaction, based on Broadcom’s closing price of common stock on May 25, 2022.

The deal will be one of the largest technology acquisitions ever, behind Microsoft’s pending $69 billion acquisition of Activision Blizzard and Dell’s $67 billion purchase of EMC in 2016.

Broadcom’s purchase of VMware will help the company diversify away from its core business of designing and selling semiconductors into enterprise software, which can have higher profit margins. Companies use VMware products to run their own servers as well as cloud servers more efficiently.

Broadcom is the most widely acquired semiconductor company and has used mergers to strategically drive its growth in recent years. It previously bought CA Technologies in 2018 for $18.9 billion, and Symantec in 2019 for $10.7 billion.

But Broadcom has not made a major acquisition since 2019. In March, Broadcom CEO Hock Tan said the company had “the ability to make a good-sized acquisition.”

Broadcom planned to buy Qualcomm in 2018 for $117 billion before the deal was blocked by former President Donald Trump, citing national security.

VMware split from Dell late last year in an effort to pay off debt. Dell originally acquired the company when it bought EMC in 2016. Michael Dell, CEO and founder of Dell, owns about 40% of VMware.

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