Broadcom Inc. on Th announced plans to acquire VMware in a cash and stock transaction valued at $61 billion, confirming rumors reported over the weekend that the ii companies were in acquisition talks. The deal represents a 32% premium over VMware’s boilerplate stock price before the rumor. Broadcom hopes to complete the transaction in its fiscal year 2023, subject to endmost atmospheric condition.
Hock Tan, Broadcom president and CEO, said the acquisition will help Broadcom “reimagine what we can deliver to customers as a leading infrastructure technology company.”
Indeed, Broadcom’s revenue shifts fundamentally upon this transaction’s completion. VMware reported $xi.eight billion in acquirement final yr. That dwarfs the $7.07 billion revenue reported past Broadcom’s own enterprise software group, which volition be renamed VMware, according to the company.
“Combining our assets and talented team with Broadcom’s existing enterprise software portfolio, all housed under the VMware brand, creates a remarkable enterprise software thespian,” says Raghu Raghuram, CEO of VMware.
With VMware joining Broadcom, 49% of its annual revenue volition come from enterprise software. Broadcom last expanded its burgeoning enterprise software portfolio in 2022 with a $10.vii billion acquisition (and subsequent sale to Accenture) of Symantec’due south enterprise security software business. Broadcom acquired security and database software company CA Technologies in 2022 for $18.ix billion. It was as well in 2022 that Broadcom unsuccessfully attempted to have over rival Qualcomm, ultimately rebuffed by the Trump administration.
Under the terms of the deal, already agreed to by both visitor’s boards and forty.2% shareholder Michael Dell and 10% owner disinterestedness firm Argent Lake, VMware shareholders will elect to receive either $142.50 in cash or 0.2520 shares of Broadcom common stock for each VMware share. Broadcom assumes $eight billion in net debt from VMware besides. Broadcom noted that it’southward obtained $32 billion in debt finance commitments to make the bargain happen.
Founded in the belatedly 1990s, VMware pioneered the virtualization market place. Its virtualization and hypervisor software is used extensively in enterprise IT to enable virtual machines to operate on servers. And while its spinoff from Dell was but final year, this is mostly par for class for VMware, which has seen a few different corporate owners since its inception.
After building momentum through the early oughts, VMware was caused by EMC Corp. in 2004 for $635 meg. At that place the visitor sat until 2016, when Dell acquired VMware as part of its $67 billion EMC acquisition: one of the biggest enterprise mergers in history, at the fourth dimension.
Dell spun VMware off again in 2021. The company was valued at most $40 billion at the fourth dimension. VMware reported $12.85 billion for FY2022, up 9% twelvemonth over year, reporting $1.82 billion in GAAP net income for the aforementioned period. Acquirement from subscription licenses and Software equally a Service (SaaS) was a bright point on the company’s annual residuum sheet — up $6.33 billion, a 13% year-over-year increment.
VMware added containerized workload back up in 2022 and has since fabricated inroads to telecom with products like its own Telco Cloud Platform. In Apr, VMware announced that it was validating Ericsson’s 5G Core to run on Telco Cloud Platform. The validation will confirm that VMware’s platform can onboard and host Ericsson’southward 5G Core Cloud Native Functions (CNFs), information technology said. VMware’s as well staking a claim in the Open RAN/vRAN market with Telco Cloud Platform RAN. The company counts companies similar Dish Network, Vodafone and Italian operator TIM among its Open RAN customers.
VMware has moved to meet the burgeoning enterprise need for seamless hybrid deject and multi-cloud deployments: a betoken VMware supports all major public cloud vendors and has partnerships with many others across the globe. This new enterprise software ascendancy with Broadcom will help customers navigate multi-cloud deployments, said VMware’s Raghuram.