Broadcom announced Thursday that it intends to acquire virtualization pioneer and multicloud leader VMware for $61 billion in a landmark technology transaction rivaled only in value by Dell's $67 billion acquisition of EMC in 2016 and Microsoft's $68.7 billion acquisition of Activision Blizzard earlier this year.
The statement on Thursday confirms allegations that the two corporations were in purchase negotiations over the weekend.
According to the release, the boards of directors of both firms unanimously accepted the transaction. The purchase is scheduled to close in Broadcom's 2023 fiscal year, which runs from November 2022 to October 2023, pending regulatory, shareholder approvals, and other closing conditions.
As part of the agreement, Broadcom's software division would be absorbed into the VMware brand. Broadcom Software Group includes infrastructure and security software solutions for businesses.
VMware CEO Raghu Raghuram in a prepared statement said that "We stand for innovation and unwavering support of our customers and their most important business operations and now we are extending our commitment to exceptional service and innovation by becoming the new software platform for Broadcom. Combining our assets and talented team with Broadcom's existing enterprise software portfolio, all housed under the VMware brand, creates a remarkable enterprise software player.
Collectively, we will deliver even more choice, value and innovation to customers, enabling them to thrive in this increasingly complex multi-cloud era."
Broadcom, which already owns CA Technologies and security behemoth Symantec, is based on semiconductors. With inflation and recession worries likely dampening future IT hardware investment, Broadcom's purchase of VMware, with its extensive portfolio of digital solutions, might serve as a balm.
"VMware's platform and Broadcom's infrastructure software solutions address different but important enterprise needs, and the combined company will be able to serve them more effectively and securely."
Tom Krause, head of the Broadcom Software Group
The news of the prospective merger coincided with the publication of VMware and Broadcom's respective quarterly earnings results on Thursday. VMware announced overall revenue of $3.09 billion for the quarter, up 3% year on year, as well as $899 million in sales from SaaS and subscription solutions, up 21% year on year. Broadcom announced overall sales of $8.1 billion, an increase of 23% year on year.