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broadcom vmware deal: Ten things to know about the $61 billion Broadcom-VMware deal

New Delhi: Broadcom, a manufacturer of computer chips and software, has agreed to pay $61 billion to acquire VMware Inc, a cloud computing business. After Microsoft Corp.’s
$68.7 billion takeover of video game producer Activision Blizzard Inc., this is the second-largest deal in 2022 globally.

Here are 10 things to know about the deal:

1. VMware shareholders can choose between receiving $142.50 in cash or 0.2520 shares of Broadcom common stock for each VMware share as part of the deal.

2. The cash-and-stock deal also includes $8 billion of VMware net debt.

3. Once the deal is completed, the Broadcom Software Group will rebrand and operate as VMware.

4. Current Broadcom shareholders are expected to own around 88% of the merged firm, while current VMware shareholders will own about 12%. The agreement has been approved by the boards of both companies, and it is anticipated to close in Broadcom’s fiscal year 2023.

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5. VMware was spun out from Dell last year, Dell and private equity firm Silver Lake remain major shareholders in the software company. Michael Dell is VMware’s chairman and he owns 40.2% of the company’s outstanding shares.

6. Broadcom chief executive officer Hock Tan had said the company is seeing that enterprise spending is “on fire”.

7. Broadcom would gain access to VMware’s cloud clients and data centres, allowing it to further capitalise on the trend.

8. After acquiring CA Technologies for $18.9 billion in 2018 and Symantec’s security division for $10.7 billion in 2019, software became a significant element of Broadcom’s business.

9. Broadcom’s bid to buy VMware is the company’s second-largest acquisition attempt, following its unsuccessful attempt to buy Qualcomm Inc for more than $100 billion in 2018.

10. Broadcom shares were up 1.6% in premarket trading, while VMWare fell nearly 1%.

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