Broadcom-VMware Deal Under Pressure In US, EU: Five Things To Know
The $61 billion mash-up now faces the same regulatory crucible that shredded the hopes of NVIDIA’s $40 billion deal with Arm.
Broadcom set a deadline to complete the acquisition of VMware by the end of this fiscal year.
When the deal was announced in May, that timeline gave CEO Hock Tan and his team 17-months to convince VMware shareholders to approve it and satisfy regulators around the world. Now with that window narrowing to 10 months, Tan has won the backing of VMware voters, but the European Commission this week announced an in-depth investigation of the takeover.
The agency’s chief enforcer, Margrethe Vestager, stated she is concerned chipmaker Broadcom may turn off its rivals’ access to VMware’s virtualization software once the deal closes. The European Commission has previously investigated Broadcom’s sales tactics in Europe and in 2021 branded them “illegal.” To avoid prosecution in that case, Broadcom submitted to a seven-year settlement which allows the European Commission to inspect its books to ensure it is not breaking the law.
Meanwhile, the U.S. has been investigating Broadcom’s plan to buy VMware since July with its own in-depth probe called a “second request” investigation. The Federal Trade Commission still has not issued a finding as to whether it will allow the merger, block it, or attach conditions to the deal.
In a statement, Broadcom has said that it anticipated the takeover could take months to finish, owing to the size of both companies as well as the billions involved in the deal. Broadcom is confident it can convince regulators of the deal’s merits.
“We look forward to continuing our constructive work with the European Commission as part of their thorough review process. We are making progress with our various regulatory filings around the world, having received legal merger clearance in Brazil, South Africa, and Canada, and foreign investment control clearance in Germany, France, Austria, and Italy,” Broadcom said in a statement.
“We continue to expect the transaction will close in Broadcom’s fiscal year 2023. The combination of Broadcom and VMware is about enabling enterprises to accelerate innovation and expand choice by addressing their most complex technology challenges in this multi-cloud era, and we are confident that regulators will see this when they conclude their review.”
Here are five things to know about the deal’s fate as 2022 slowly comes to a close: