Chip giant Broadcom has circled 30 October as the likely date for the closure of its VMWare mega-deal.
The NASDAQ-listed outfit yesterday “affirmed its expectation” that the $61bn union will complete one day before Halloween after receiving the green light from the UK’s Competition and Markets Authority (CMA).
The CMA had previously expressed concern that the deal could stunt innovation and drive up the price of servers.
However, following an indepth ‘Phase 2’ inquiry, the CMA has dropped its opposition after finding the deal “would not substantially reduce competition in the supply of server hardware components in the UK”.
Receiving final approval from the body means Broadcom has cleared one of the last major hurdles standing in the way of its consummation of the deal, which was first announced in May 2022.
Partner charm offensive
Broadcom CEO Hock Tan has conducted a charm offensive towards VMware customers and partners over the last 15 months, repeatedly rebutting press speculation that Broadcom intends to raise the price on VMware products. In March, he penned a blog seeking to hammer home Broadcom’s commitment to its partner ecosystem, which currently comprises 35,000 partners.
Semiconductor and infrastructure software giant Broadcom turned over $33.2bn in its fiscal 2022, while VMware posted revenues of $13.35bn.
When it was first announced, VMware CEO Raghu Raghuram (pictured below) said the deal would create a “remarkable enterprise software player”.
The deal also recently bagged legal clearance from the EU, as well as in Australia, Brazil, Canada, Israel, South Africa and Taiwan, Tan pointed out in yesterday’s statement. There is also now “no legal impediment to closing under US merger regulations”, he added.
If Broadcom’s expected timeline for closure is realised, this will mean the deal will be sealed before the end of its fiscal 2023 – in line with its original prediction.
Richard Feasey, chair of the independent panel carrying out the CMA’s Phase 2 inquiry, said:
“Broadcom and VMware are US-based companies supplying hardware and software used by thousands of businesses and public bodies in the UK. Even if the UK market represents a small proportion of total sales in a merger, the CMA’s job is to scrutinise deals like this thoroughly to ensure they don’t harm competition in the UK.”