The rumors shared on May 23 concerning the acquisition of software designer VMware by the American semiconductor manufacturer, Broadcom, have been confirmed. With this acquisition, the Californian company diversifies its activities beyond electronic components and confirms its strategy of acquisitions in the software sector. The American antitrust will however have to examine the case.
VMware, second biggest acquisition of the year
This acquisition is the second largest in 2022 after the acquisition of Activision-Blizzard by Microsoft for 69 billion dollars. Broadcom formalized on May 26 via a statement a transaction worth $61 billion. The redemption will be in the form of cash and shares. Broadcom will also assume VMware’s $8 billion debt.
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Broadcom has been expanding its business in the software industry for several years. In 2018, the manufacturer bought CA Technologies, a project management software publisher, for $19 billion. It then bought cybersecurity specialist Symantec for $10.7 billion in 2019. VMware, which designs professional software, is in line with this strategy.
TechCrunch specifies that VMware had acquired several start-ups which represent major assets for Broadcom. Heptio, a specialist in the Kubernetes system, an open source platform that allows the use of applications on any corporate network, is one of them. VMware also has Pivotal, a support service for companies in technology transition to more modern systems.
A case closely watched by the American antitrust
VMware CEO Raghu Raghuram said that “ Combining our assets and talented people with Broadcom’s already existing software portfolio, all under the VMware brand, creates a remarkable player among software companies. »
According to Holger Mueller, an analyst at consulting firm Constellation Research interviewed by TechCrunchthere is a real synergy between the three software companies CA Technologies, Symantec and VMware, now owned by Broadcom.
However, this diversity in Broadcom’s business will not work in favor of the acquisition, which has yet to be reviewed by the US antitrust authority. As a takeover of more than $60 billion, the second biggest of the year, the Federal Trade Commission (FTC) is going to take a serious look at the matter. Even if the FTC is overwhelmed by mergers, it had accused Broadcom of abuse of dominant position in 2021. It is therefore unlikely that it will be lax towards the manufacturer.