Chipmaker Broadcom has announced that it has agreed to acquire the cloud computing company VMware for a hefty price of $61 billion in a deal that includes both cash and stock. This acquisition is the most significant one that is made by Broadcom and it is one step closer to the company’s plans of diversifying its business into the enterprise software industry.
Broadcom will offer $142.50 for each share of VMware:
Once the due diligence process concludes and the deal is set in stone, VMware stockholders will get $142.50 per share which amounts to a premium of 49% over the stock’s closing price. The shareholders will also get 0.2520 shares of a Broadcom common stock. The reports of a deal surfaced on the 22nd of May. Subsequently, Broadcom’s shares are up by 3% and VMware’s shares are up by 2%.
As a part of this deal, Broadcom will also be taking over the company’s liability up to the tune of $8 billion in net debt. Last year, Dell Technologies spun out VMware, a company in which Michael Dell owns a 40% stake. His financiers, Silver Lake own 10%, both of whom voted in favor of this deal.
VMware’s offer from Broadcom was unsolicited and the company is well within its rights to entertain offers from other bidders for a period of 40 days as per its agreement with Broadcom.