Semiconductor giant Broadcom Inc. has officially completed its acquisition of software company VMware Inc., wrapping up a prolonged business saga that stretched over 18 months. The $61 billion deal was initially announced in May 2022 but faced a series of regulatory challenges globally.
Through this acquisition, Broadcom strengthens its footing in the realm of software, complementing its current focus as a chipmaker. The company’s CEO, Hock Tan, sees this deal as a medium to delve deeper into the hybrid cloud services market. These services cater to businesses that store their data in both proprietary and external server farms. “Together we are well positioned to enable global enterprises to embrace private and hybrid cloud environments, making them more secure and resilient,” Tan said in a statement.
The path to this acquisition, however, was not smooth and was mired in regulatory barriers. Regulators from the EU, UK, South Korea, Japan, among others, had raised questions on the transaction. A final approval came from China earlier this week, permitting Broadcom to finalize the takeover. Broadcom must adhere to preset conditions with Chinese markets, ensuring interoperability of VMware’s server software with hardware from Broadcom’s competitors, as prescribed in a statement released by the regulator.
The acquired entity, VMware, will now serve as the core of Tan’s software business. By roping in VMware, he widened the chipmaker’s business base, which had previously grown by acquiring CA Technologies and Symantec Corp’s corporate security business.
Established in 1998, VMware pioneered in developing virtualization programs, which enabled the consolidation of applications and workloads on fewer server computers. This breakthrough allowed servers to multitask and run more than one program. To finance this acquisition, Broadcom borrowed $28.4 billion under a credit agreement, to be used as working capital, for refinancing VMware’s existing debt, and to cover related costs and expenses.