In a cash-and-stock transaction for a total of $61 billion, Broadcom has agreed to acquire VMware. It is one of the largest purchases in the technology industry history, ranking third after Dell's $67 billion transactions for EMC and Microsoft's upcoming acquisition of Activision Blizzard for $68.7 billion. The chip industry, in which Broadcom specializes, has made the company famous. Broadcom designs and manufactures semiconductors for modems, Wi-Fi, and Bluetooth chips that are used in a variety of different products.
The Reason for The Acquisition
This massive purchase by VMware is intended to strengthen Broadcom's position in the software market. VMware is a company that specializes in cloud computing and virtualization technologies. Prior to being split out from Dell a year ago, VMware was owned by Dell. During the last ten years, if you've used a virtual machine at work, there's a good chance that it was powered by VMware or by Citrix, one of VMware's competitors. Broadcom chips are utilized in products manufactured by Apple, Google, and other companies. It is possible that the devices on which you have used Wi-Fi or Bluetooth were probably powered by Broadcom chips at some point in the chain of networking.
It is possible that VMware and Broadcom working together will produce a formidable product with a concentration on business infrastructure and cloud computing. Before, in 2018, Broadcom paid $18.9 billion to purchase CA Technologies, a company that makes database and security software. The following year, in 2019, the company paid $10.7 billion to acquire the enterprise security section of Symantec. A little over a year and a half later, it sold the Symantec company to Accenture for a price that was not revealed.
Future Plans For Broadcom
In the near future, Broadcom intends to change the name of its Broadcom Software Group to VMware and combine all of its current network administration and security software products onto the VMware platform. "By combining Broadcom's established business software portfolio with our own assets and brilliant team, all of which will be housed under the VMware brand, we will be able to build a spectacular enterprise software player," said Raghu Raghuram, the Chief Executive Officer of VMware.
The transaction, the completion of which is anticipated to take place during Broadcom's fiscal year 2023, has the support of Michael Dell, who, in conjunction with Silver Lake, controls about half of VMware. If the acquisition goes through, it will be one of the most significant transactions in the history of the technology industry. The earlier attempt by Broadcom to acquire Qualcomm, a competitor in the semiconductor industry, for more than $100 billion was unsuccessful because the Trump government prevented the transaction on the grounds that it may compromise national security.
Featured image: Broadcom
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