May 23, 2022 - Economy

Broadcom preps mega-deal for VMware

Illustration of a cloud in the shape of a play icon.

Illustration: Gabriella Turrisi/Axios

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."

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