It is reported that Broadcom is likely to announce its acquisition of VMware as soon as Thursday. However, after several reports that the two companies are negotiating, the news may come earlier. The report said that some substantive terms still need to be finalized, and there is still the possibility of failure in the current transaction. According to sources familiar with the transaction, if the transaction is realized, it will be completed in the form of cash and shares. Michael Dell owns about 40% of VMware.
VMware shares closed up nearly 25% on Monday. Meanwhile, chip maker Broadcom's shares closed down more than 3%. Bloomberg first reported on the ongoing negotiations between the two companies on Sunday.
As of the close of last Friday, VMware has a market value of $40.3 billion. If this transaction is finally completed, it will be among the largest acquisitions in the field of technology, second only to Microsoft's recent acquisition of Activision Blizzard with nearly $69 billion and Dell acquired EMC with us $67 billion in 2016.
This transaction can also help Broadcom further diversify its business from semiconductor business to enterprise software business, which has always been the focus of the company. This will be another acquisition after the company acquired CA technologies with us $18.9 billion in 2018 and Symantec with us $10.7 billion in 2019.
"In particular, they are looking for sticky, mission critical enterprise software manufacturers, focusing on major Fortune 500 customers. The recent downward trend in software stocks may make this transaction easier now," ab Bernstein analysts said in a note to investors on Monday