Broadcom closes VMware deal after 18-month saga ending in China: Report

By Nick Turner and Ian King

Broadcom Inc. completed its takeover of software maker VMware Inc. following an unexpectedly long 18-month process that culminated in the deal getting approval in China. 
 

The transaction, worth $61 billion when it was announced in May 2022, pushes the chipmaker deeper into software. Broadcom Chief Executive Officer Hock Tan is using the deal to build a bigger foothold in so-called hybrid cloud services, which cater to businesses that store data both in their own facilities and outside server farms. 

“Together we are well positioned to enable global enterprises to embrace private and hybrid cloud environments, making them more secure and resilient,” he said in a statement Wednesday.

But first, the acquisition had to clear a gauntlet of regulatory opposition, underscoring the difficulty of getting deals completed in 2023. The EU, UK, South Korea, Japan and other jurisdictions all weighed in on the transaction. 

Broadcom completed the takeover after getting approval from Chinese regulators earlier this week, but that blessing came with a list of conditions it must fulfill. There was no remaining legal impediment to closing in the US under merger regulations. 

The conditions imposed by China are tied to how the companies sell their products in the local market, including making sure VMware’s server software is interoperable with Broadcom’s competitors’ hardware, the regulator said in a statement Tuesday. China said it would approve the deal if the conditions were met and that it had the right to supervise and inspect the companies’ adherence to the restrictions.

VMware will now become the centerpiece of Tan’s software operations. He previously purchased CA Technologies and Symantec Corp.’s corporate security business, diversifying the chipmaker’s business.

VMware, founded in 1998, pioneered virtualization programs, which consolidated applications and workloads on a smaller number of server computers. The innovation made it easier for servers to handle more than one program.

To help finance the deal, Broadcom borrowed the full $28.4 billion available under a credit agreement previously reported in August, according to a filing. That will provide working capital, refinance VMware’s existing debt, and pay related costs and expenses.