UK regulators investigate Broadcom’s $61 billion deal with VMware
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The competition regulator in the United Kingdom is investigating whether Broadcom, a US chipmaker, has reduced its competition after acquiring VMware Inc. Broadcom Inc acquired VMware in a $61 billion deal.
UK regulators investigate VMware’s acquisition by Broadcom
The deal between Broadcom and VMware was announced in May. It will be the second-largest deal globally in 2022. It also marks an attempt by Broadcom to diversify its business operations into enterprise software.
The two companies are also seeking antitrust approval from the European Union. The investigation into this acquisition deal is in line with the increased interest by regulators in tech-related deals.
These deals are being investigated because of concerns that these companies could yield a lot of market power. When market share is concentrated in a small group, it undermines the sector’s competitiveness. Moreover, there is also the possibility that large companies acquire startups to kill them.
The Competition and Markets Authority (CMA) has invited comments from interested parties. These comments need to be submitted by December 6, and they will help the regulator to assess whether it should formally start an investigation into the acquisition of VMware by Broadcom.
Broadcom’s acquisition of VMware
Broadcom acquired VMware in a massive $61 billion deal that was completed earlier this year. The acquisition deal was a combination of both cash and stock. Through this deal, Broadcom also assumed an $8 billion VMware debt. The deal has been investigated for more than six months since it was completed.
By acquiring VMware, Broadcom will gain exposure to new business areas, allowing the company to move past core virtualization. Broadcom’s acquisition deal also allowed the chipmaker to acquire other subsidiaries that had been acquired to diversify, including Heptio and Pivotal. The latter is a firm that provides support services for firms that are switching to modern technology.
When the company purchased Pivotal, it closed an acquisition deal for Carbon Black, a security company. The CEO of VMware, Raghu Raghuram, stated at the time of the acquisition that the companies were better together.
“Combining our assets and talented team with Broadcom’s existing enterprise software portfolio, all housed under the VMware brand, creates a remarkable enterprise software,” Raghuram said, referring to the other companies that were acquired by Broadcom.
