The company Broadcom, which makes computer chips and software, said it got approval from all the necessary authorities to finish buying the cloud technology company VMware for $69 billion. The deal is set to be completed on Wednesday, according to reuter.
Broadcom, located in San Jose, California, decided to go ahead with the purchase once China also gave the green light. In total, Broadcom is using $61 billion in cash and stock to buy VMware and is taking on $8 billion of its debt. This makes it one of the largest technology deals ever.
Tech Acquisition Developments
The announcement came soon after Microsoft acquired video game-maker Activision Blizzard for $69 billion, also one of the most expensive tech acquisitions in history.
Broadcom needed 18 months to secure all the necessary approvals from regulators, and they got them just in time just days before the merger agreement was set to end.
The acquisition got the green light after China’s State Administration of Market Regulation reviewed and accepted Broadcom’s commitments, which were submitted on Monday. These commitments were aimed at lessening the impact of the merger.
These huge purchases are happening during a time of increased worry due to disruptions in the global supply chain, conflicts in Europe and the Middle East, and rising prices that could slow down both business and consumer activities.
Before this, Broadcom’s plan to acquire was approved by the competition regulator in Britain.
Broadcom’s Global Approvals and Cloud Computing Expansion with VMware Acquisition
Many businesses and organizations, like big banks, large retailers, telecom companies, and government departments, depend on Broadcom’s equipment and VMware software. The European Commission, which is the executive branch of the EU and oversees antitrust matters, gave the green light to the deal after Broadcom addressed concerns about competition by making certain commitments.
Broadcom aims to strengthen its position in the cloud computing market, and by acquiring VMware, it can help large businesses integrate public cloud services with their internal networks. VMware, based in Palo Alto, California, has strong connections with major cloud companies like Amazon, Google, and Microsoft.
Broadcom stated that it has received legal approvals in various countries, including Australia, Brazil, Canada, China, the European Union, Israel, Japan, South Africa, South Korea, Taiwan, the United Kingdom, and has obtained “foreign investment control clearance in all necessary jurisdictions.”
Broadcom Confirms U.S. Regulatory Clearance
According to Broadcom, there are no legal obstacles to completing the merger under U.S. regulations.
Numerous similar agreements have taken place as the stock prices of technology companies dropped from their extremely high levels during the pandemic, making these acquisitions more financially feasible.
However, Broadcom’s CEO, Hock Tan, has been actively seeking such deals for years, expanding the company through significant acquisitions such as Symantec for nearly $11 billion in 2019 and CA Technologies for about $19 billion the year before.
During an earnings call shortly after announcing the deal, Tan characterized the plan to acquire VMWare as a “highly distinctive opportunity to elevate our company and its business to the next level.”
Broadcom secured all approvals to finalize the $69 billion acquisition of VMware, positioning itself as a major player in the tech industry. This strategic move comes amidst a wave of high-profile acquisitions, reflecting a trend in the tech market. Broadcom’s CEO, Hock Tan, emphasizes the unique opportunity to elevate the company’s business to new heights, marking a pivotal moment in its expansion journey.