Broadcom To Buy VMware For $61 Billion
Elon Musk’s multi-billion dollar offer to buy Twitter isn’t the only deal with astronomical figures. As per reports, Broadcom Inc. has agreed to buy VMware Inc., the cloud-computing company, for around $61 billion.
The transaction is one of the biggest technology deals in history that will turn the chipmakers into a massive force in the software sector.
The deal
VMware shareholders can decide to either collect $142.50 or 0.2520% shares of Broadcom stock for every VMware share. The offer is in line with around a 44% premium to VMware’s closing stock price on May 20, which was the last day before the takeover, as per Bloomberg News.
The Broadcom shareholders will hold nearly 88% of shares in the company, while the VMware shareholders will receive the remaining 12% once the deal is complete. Broadcom released a statement with the second-quarter earnings that reported profits of around $9.07 for each share on revenue of $8.1 billion.
The chipmakers also stated that the company would maintain the current dividend policy of providing 50% of its shareholders’ prior year’s cash flow.
What the CEO has to say?
Broadcom’s CEO, Hock Tan, said, “Building upon our proven track record of successful M&A, this transaction combines our leading semiconductor and infrastructure software businesses with an iconic pioneer and innovator in enterprise software as we reimagine what we can deliver to customers as a leading infrastructure technology company.”
As per the report, the VMWare shares accounted for 29.8% of the potential Broadcom takeover and were listed at 3.7% higher in the early trading, the change sides at $125.03 per share. Meanwhile, the prices of Broadcom share increased 4.1% to a new valuation of $553.45.
VMware CEO Raghu Raghuram said in a statement, “Combining our assets and talented team with Broadcom’s existing enterprise software portfolio, all housed under the VMware brand, creates a remarkable enterprise software player.”
VMware shares recorded a five-year low last week after a report from U.S. Cybersecurity and Infrastructure Security Agency, which advised the federal agencies to remove their products due to vulnerability to hackers.
The group will now report the earnings of its first fiscal quarter after closing trading on Thursday, with the analysts looking for at least $1.73 per share on revenues of $3.46 billion
