Broadcom in talks to purchase cloud computing company VMware
The terms of the potential deal have not been disclosed
Chipmaker Broadcom is in advanced talks to acquire cloud service company VMware in a cash-and-stock deal, though negotiations are still ongoing, and an agreement is not imminent.
Broadcom, valued at $222 billion, would further diversify its business away from semiconductors and into enterprise software if the purchase is completed. Broadcom bought CA Technologies for $18.9 billion in 2018 and Symantec Corp’s security division for $10.7 billion in 2019.
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FILE PHOTO- The Broadcom Limited company logo is shown outside one of their office complexes in Irvine, California, U.S., March 4, 2021. ( REUTERS/Mike Blake / Reuters Photos)
VMware has a market value of $40 billion, but the price of the deal is expected to be higher, although the terms of the potential deal have not been disclosed, Bloomberg reported.
Shares in VMware jumped 15% in premarket trading on Monday, giving it a market value of about $46 billion. Meanwhile, Broadcom's value suffered a 2.4% drop.
Reports of a potential deal come after Broadcom Chief Executive Officer Hock Tan said in March that the company had room for a "good size" acquisition.
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FILE PHOTO- A sign to the campus offices of chip maker Broadcom Ltd, is shown in Irvine, California, U.S., November 6, 2017. (REUTERS/Mike Blake/File photo / Reuters Photos)
Broadcom was in talks last year to acquire software company SAS Institute Inc., valued at $15 billion to $20 billion, but negotiations ended without an agreement.
The company also failed in its attempt to purchase rival chipmaker Qualcomm Inc. in 2018. Tan reportedly had to withdraw the company's offer after facing resistance from the Trump administration on the grounds of national security. Concerns were raised about Broadcom’s Singapore headquarters, which have since been relocated to San Jose, California, about 20 miles from VMware’s headquarters in Palo Alto.
VMware is a pioneering Silicon Valley company founded in 1998. It invented virtualization software, consolidating applications and workloads on a smaller number of server computers.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AVGO | BROADCOM INC. | 166.51 | +4.43 | +2.73% |
The company was acquired by storage technology giant EMC Corp. in 2004. A portion of EMC's stake was then sold as part of VMware’s initial public offering just three years later. Dell Technologies Inc. took over the business when it acquired EMC in 2016. VMware spun off from Dell in 2021.
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Dell CEO Michael Dell remains a top investor in VMware with a 40% stake, Refinitiv data shows, according to Reuters.