Broadcom preps mega-deal for VMware
Broadcom is in talks to buy VMware, the cloud computing giant controlled by Michael Dell, per multiple reports. VMware had a $40 billion market cap prior to the news, and its stock price spiked nearly 20% at this morning's open.
Why it matters: Broadcom has become one of tech's biggest acquirers, even if it doesn't get lumped into "Big Tech."
- In 2018 the company paid nearly $19 billion for IT management software giant CA Technologies, after government regulators blocked its $130 billion agreement to buy rival chipmaker Qualcomm.
- Later it paid $10.7 billion for Symantec's enterprise security business, after first discussing a takeover of Symantec in its entirety.
Cap table: Michael Dell holds a 40% stake in VMware, which spun out of Dell Technologies in 2021, while his private equity partner Silver Lake has nearly a 10% position.
Bloomberg explains the rationale: "Broadcom makes a wide range of electronics, with its products going into everything from the iPhone to industrial equipment. But data centers have become a critical source of growth, and bulking up on software gives the company more ways to target that market."