Based on the closing price of Broadcom common stock on May 25, 2022, Broadcom will acquire all outstanding shares of VMware in a cash-and-stock deal valued at roughly $61 billion. Broadcom would also take up $8 billion of VMware’s net debt. The Broadcom Software Group will rebrand and operate as VMware when the acquisition closes, including Broadcom’s current infrastructure and security software products as part of an expanded VMware portfolio.
As a multi-cloud services provider, VMware was one of the first to develop virtualization technology, which revolutionized x86 server-based computing. After that, VMware pioneered the software-defined data center and was a pioneer in virtualizing networking and storage before transforming into a hybrid cloud and digital workplace leader.
Today, VMware’s multi-cloud portfolio, which includes application modernization, cloud management, cloud infrastructure, networking, security, and anywhere workspaces, provides a flexible, consistent digital foundation on which the world’s most important and complex workloads are built, managed, connected, and protected for the benefit of their clients.
The combined company would provide enterprise clients with an expanded platform of critical infrastructure solutions to accelerate innovation and address the most complex information technology infrastructure needs by combining the Broadcom Software portfolio with the VMware platform.
Organizations would be provided with more choice and freedom to design, run, manage, connect, and secure applications at scale across diverse, dispersed settings, regardless of where they run: from the data center, to any cloud, and to edge computing, thanks to the unified solutions. With the combined company’s shared focus on technology innovation and significant research and development expenditures, Broadcom would deliver compelling benefits for clients and partners.
Delivering Enterprise Solutions
“Building upon our proven track record of successful M&A, this transaction combines our leading semiconductor and infrastructure software businesses with an iconic pioneer and innovator in enterprise software as we reimagine what we can deliver to customers as a leading infrastructure technology company,” said Hock Tan, President and Chief Executive Officer (CEO) at Broadcom. “We look forward to VMware’s talented team joining Broadcom, further cultivating a shared culture of innovation and driving even greater value for our combined stakeholders, including both sets of shareholders.”
“VMware has been reshaping the IT landscape for the past 24 years, helping our customers become digital businesses,” said Raghu Raghuram, Chief Executive Officer (CEO) at VMware. “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.”
Within three years after closure, the acquisition is estimated to generate roughly $8.5 billion in pro forma EBITDA. Software revenue is estimated to account for roughly 49 percent of overall Broadcom revenue in fiscal year 2021, pro forma.
“Together with Broadcom, VMware will be even better positioned to deliver valuable, innovative solutions to even more of the world’s largest enterprises,” said Michael Dell, Chairman of the VMware Board. “This is a landmark moment for VMware and provides our shareholders and employees with the opportunity to participate in meaningful upside.”