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Broadcom Inc<\/a> said on Thursday it will acquire cloud computing company VMware Inc<\/a> in a $61 billion cash-and stock deal, the chipmaker's biggest and boldest bid to diversify its business into enterprise software.
The acquisition is the second biggest announced globally so far this year, trailing only Microsoft Corp<\/a>'s $68.7 billion deal to buy video game maker Activision Blizzard Inc .
The offer of $142.50 in cash or 0.2520 of a Broadcom<\/a> share for each VMware<\/a> stock represents a premium of nearly 49% to the stock's last close before talks of the deal were first reported on May 22. Broadcom will also assume $8 billion of VMware's net debt.
The chipmaker's shares closed up 3.5% and VMware rose 3.1%.
Broadcom Chief Executive Hock Tan, who built his company into one of the world's biggest chipmakers<\/a> through acquisitions, is now bringing his dealmaking playbook to the software sector.
In one fell swoop, the deal will almost triple Broadcom's software-related revenue to about 45% of its total sales.
Broadcom will instantly be validated as a major software player with the acquisition of VMware, Futurum Research analyst Daniel Newman said.
\"Having something like VMware ... will have a significant number of doors open that their current portfolio probably doesn't open for them,\" Newman added.
The deal comes at a time when there is an increased push by the Biden administration for more competition in all sectors ranging from agriculture to technology.
\"The Federal Trade Commission (FTC) could be concerned Broadcom will use the acquisition to potentially bundle services or raise prices,\" Josh White, assistant professor of finance at Vanderbilt University, said.
\"Ultimately, the FTC will want to understand if this consolidation would impact overall competition and prices, especially in this inflationary environment,\" White, also a former financial economist for the Securities and Exchange Commission, said.
The agreement is also a coup for Dell Technologies Inc Chief Executive Michael Dell, who spun VMware out of the computer maker last year.
Michael Dell owns a 40% stake in VMware, while his financial backer Silver Lake, a private equity firm, owns 10%. They have both agreed to vote in favor of the deal.
Broadcom has already got commitments from a consortium of banks for $32 billion in debt funding. VMware, which said the offer was unsolicited, will be allowed to solicit offers from rival bidders for 40 days as part of the agreement.
If VMware picks another offer after this time lapses, the firm will have to pay Broadcom $1.5 billion as break-up fee.
However, if it decides to pick another offer before this period ends, a termination fee of $750 million must be paid.
Both the companies also reported quarterly results, with Broadcom forecasting better-than-expected revenue for the third quarter, while VMware suspended its full-year outlook due to the pending acquisition.
Broadcom's board also authorized a new share repurchase program of up to $10 billion.
BID TO DIVERSIFY<\/strong>
Broadcom's pivot into software started after its attempt to acquire mobile chip giant Qualcomm Inc was blocked by former U.S. President Donald Trump in 2018 on national security grounds.
Since then Broadcom took over business software firm CA Technologies Inc for $18.9 billion and acquired Symantec Corp's security division for $10.7 billion. It also explored acquiring analytical software company SAS Institute Inc, but did not proceed with a bid.
Broadcom then went on to slash costs at the acquired businesses. It cut the sales and marketing budgets of the CA and Symantec businesses from about 29% of their revenue to 7%.
VMware is dominant in the so-called virtualization software market, that allows corporate customers to run multiple applications on their servers.
This business has started to slow as companies have found new tools to operate through cloud computing, pushing VMware to seek new offerings, including through a partnership with Amazon.com Inc.
Broadcom doesn't have a track record of spending big on research and development, Keith Townsend, analyst at advisory firm CTO Advisor, said.
This could bode poorly for the launch of new products at VMware, Townsend, who also had a brief stint with VMware as an enterprise data center architect, said.
\"As I talk to customers, they're in desperate need for innovation from companies like VMware.\"
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芯片制造商Broadcom购买云服务公司VMware约为61美元左右
提供142.50美元的现金或0.2520每个VMware的Broadcom份额股票溢价近49%的股票交易的前的最后一个亲密会谈首次公布5月22日。Broadcom VMware也将承担80亿美元的净债务。
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博通公司云计算公司周四表示,它将获得VMware公司610亿美元的现金加股票交易,芯片制造商最大的和大胆的尝试,以分散其业务在企业软件。
此次收购是全球第二大宣布今年迄今为止,仅落后微软(msft . o:行情)687亿美元收购视频游戏制造商动视暴雪公司。
提供的现金或0.2520的142.50美元博通公司分享每一个VMware股票溢价近49%的股票交易的前的最后一个亲密会谈首次公布5月22日。Broadcom VMware也将承担80亿美元的净债务。
VMware芯片制造商的股价收盘上涨3.5%,上涨了3.1%。
博通典当Tan首席执行官,他的公司发展成为世界上最大的之一芯片制造商通过收购,现在把他交易剧本软件行业。
一举,这笔交易将几乎三倍Broadcom的相关收入约占其销售总额的45%。
博通公司将立即被认可作为一个主要软件播放器与VMware的收购,Futurum研究分析师丹尼尔·纽曼说。
“有类似VMware……将有大量的门打开,他们目前的投资组合可能不开,”纽曼说。
交易之际,有一个由拜登管理推动增加更多的竞争在所有领域,从农业技术。
“联邦贸易委员会(FTC)可能是担心Broadcom将利用此次收购可能包服务或提高价格,”乔希白色,范德比尔特大学金融学教授助理说。
“最终,联邦贸易委员会想要理解这种合并是否会影响整体竞争和价格,特别是在这种通货膨胀的环境下,“白,还曾担任美国证券交易委员会(sec)金融分析师,说。
协议也是一个政变为戴尔技术公司首席执行官迈克尔•戴尔去年纺VMware的电脑制造商。
迈克尔·戴尔在VMware拥有40%的股份,而他的金融支持者银湖,私人股本公司持有该公司10%的股权。他们都同意投票支持这项交易。
博通公司已经收到银行组成的财团承诺320亿美元的债务资金。VMware表示,提供主动,可以征求对手竞购者提供40天作为协议的一部分。
如果VMware挑选另一个提供这次失误后,该公司将不得不支付Broadcom 15亿美元的分手费。
然而,如果它决定选择另一个提供这段时间结束前,必须支付7.5亿美元的终止费用。
与博通公司也公布了季度业绩,预测第三季度收入好于预期,而VMware期间暂停了全年财测,由于收购。
博通公司董事会还授权一个新的100亿美元的股票回购计划。
为了多样化
Broadcom的主进入软件后开始收购移动芯片巨头高通(qcom . o:行情)被美国前总统在2018年以国家安全为由唐纳德·特朗普。
此后Broadcom接管商业软件公司CA技术公司189亿美元,以107亿美元收购赛门铁克(symc . o:行情)的安全部门。它也探索收购分析软件公司SAS研究所有限公司,但没有进行投标。
Broadcom接着在收购企业削减成本。的销售和营销预算削减CA和赛门铁克企业从他们收入的29%到7%。
所谓的虚拟化软件VMware是占主导地位的市场,允许企业客户在他们的服务器上运行多个应用程序。
这个业务已经开始放缓,公司发现新工具通过云计算运营,推动VMware寻求新产品,包括通过与Amazon.com合作公司。
Broadcom没有记录的研发支出大,基思•汤森德咨询公司首席技术官顾问,分析师说。
这可能预示着糟糕的VMware的推出新产品,汤森,与VMware也有了一段时间作为一个企业数据中心架构师,说。
“我跟的客户,他们迫切需要从像VMware公司创新。”
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