Broadcom in Talks to Acquire Cloud Company VMware

According to people familiar with the situation, chipmaker Broadcom Inc (AVGO.O) is in talks to acquire cloud service provider VMware Inc (VMW.N).

Source – CNBC

According to the sources, negotiations between Broadcom and VMware are ongoing and a deal is not imminent. The terms of the deal under consideration could not be learned.

Following its $18.9 billion acquisition of CA Technologies and its $10.7 billion acquisition of Symantec Corp’s security division in the last four years, Broadcom’s business would be further diversified away from semiconductors and into enterprise software.

Bloomberg News broke the story late on Sunday. Reuters’ requests for comment were not immediately responded to by Broadcom or VMware. VMware’s market capitalization was $40.3 billion as of Friday’s market close.

According to Refinitiv data, Michael Dell is VMware’s largest investor, holding a 40% stake after Dell Technologies Inc (DELL.N) spun out VMWare to its shareholders last year.

According to Refinitiv data, private equity firm Silver Lake, which previously had invested in Broadcom, is VMware’s second major shareholder with just a 10% stake.

Broadcom Corporation is a fabless semiconductor company based in the United States that manufactures products for the wireless and broadband communication industries. It was purchased by Avago Technologies in 2016 and now operates as a wholly-owned subsidiary of Broadcom Inc.

Broadcom’s product line includes computer and telecommunication networking components: the company offers products for enterprise/metropolitan high-speed networks as well as SOHO (small-office, home-office) networks. Transceiver and processor integrated circuits (ICs) for Ethernet and wireless LANs, cable modems, digital subscriber line (DSL), servers, home networking devices (routers, switches, port-concentrators), and cellular phones (GSM/GPRS/EDGE/W-CDMA/LTE) are among the products available.

This is also recognized for a series of high-speed encryption co-processors, which offload this processor-intensive work to a dedicated chip, greatly speeding up encryption-related tasks. This has numerous practical implications for e-commerce and secure communications using PGP or GPG.

VMware, Inc. is a California-based cloud computing and virtualization technology company. VMware was the very first commercially successful company to commercially successful virtualize the x86 architecture.

VMware’s desktop software that runs on Microsoft Windows, Linux, and macOS, whereas VMware ESXi is a bare-metal hypervisor that runs directly on server hardware without the need for an additional underlying operating system.