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77 trillion won Big Deal Sacred. Why did you buy VMware for Broadcom?

Broadcom, a telecommunications chip, has acquired the leader VMware in virtualization and cloud software for $ 61 billion. It is expected to be recorded as a case of M & A, the second largest technology company acquisition (M & A) after Microsoft's acquisition of Blizzard and Dell's acquisition of EMC.

With this acquisition, Broadcom has become similar to the telecommunications chip sector and the SW sector, which will take a more stable business portfolio. In addition, as the software group of Broadcom, which includes Symantec and CA business, combined with VMware, VMware can expand the product lineup that can be provided to enterprise customers.

■ 77 trillion won Big Deal... Go-Shop, but it seems to be completed

Broadcom announced on the 26th that it will acquire VMware for $ 61 billion. The trading price was set with a 33%premium on May 25, based on the common stock price. In addition, Broadcom has decided to take a $ 8 billion net debt of VMware.

Broadcom's deal strategy with VMware triples software business, says Bernstein's Stacy Rasgon

VMware shareholders can choose one of $ 142.5 per share or 0.2520 Broadcom shares. This deal, the chairman of the VMware Board of Directors and the largest shareholder, Michael Dell, earned a big profit.

VMware was acquired by EMC for $ 625 million in 2004, and in 2015, VMware was also part of the Delt Technologies Group, with EMC sold for $ 67 billion. In November last year, Dell became an independent company, spunting VMware and disposing 81%of its stake, but since then, Michael Dell remains as the chairman of the VMware Board with 40%of VMware shares.

This transaction includes the 'Go-Shop' clause, where VMware can receive another acquisition proposal by July 5th. If you start trading with other acquisitions, VMware must pay $ 750 million to Broadcom. In addition, if the regulatory agency does not allow this transaction, the contract is included in the contract that Broadcom will have $ 1.5 billion in debt in VMware.

However, unless there is this, the transaction is expected to be completed in 2023.

■ Broadcom, VMware acquisition, leap forward as a comprehensive IT company from semiconductor to cloud

Broadcom, led by Malaysian American chief executive officers, has turned to the acquisition of a software company and searched for targeted companies since the 2017 Qualcomm attempted to acquire Qualcomm in 2017. The acquisition of Qualcomm was defeated by US President Donald Trump against national security.

Broadcom has since acquired $ 18.9 billion in software company CA Technology in 2018 and $ 10.7 billion in Symantec's enterprise security department in 2019.

In addition to this, Broadcom has strengthened its business in the software area by getting VMware. VMware is one of the most important companies that grow into virtualization technology and provide software for the implementation and operation of cloud data centers.

When the transaction is completed, the Broadcom software group, which includes CA and Symantec businesses, will be integrated into VMware. "If the assets and talents of VMware are combined with the existing Broadcom software portfolio, VMware CEO," said VMware, CEO of VMware.

When the acquisition is finished, Broadcom will become a comprehensive technology company that encompasses the chip and software business.

Currently, Broadcom's sales are highly dependent on the chip business. The company posted sales of $ 24 billion in the chip sector in 2021 and $ 7.1 billion in the software sector.


After the acquisition of VMware, Broadcom's software sales are three times as long as they are now, and the proportion of sales is expected to balance the chip and software at 50 to 50.

M & A advisory company Martin Wolf's team Muller said in an IT foreign protocol, "Broadcom CEO has not been able to continue to increase as it is, and it is very logical to expand the software business." Wear will play an important role in Broadcom in the future. ”

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