Michael Dell ‘Confident’ Broadcom-VMware Deal Will Pass
‘What I heard from them and from [Broadcom CEO] Hock [Tan] is they’re going to invest heavily in the core VMware platform,’ Michael Dell tells CRN about the pending acquisition of VMware by Broadcom.
Dell Technologies CEO Michael Dell told CRN he is “confident” the deal between Broadcom and VMware will survive its trip through regulators at home and abroad and ultimately be completed.
“Based on everything I know, which is probably a little more than most, I would say, hopefully. I’m confident it’s going to happen,” the Dell Technologies founder and chairman told CRN last week.
As the largest personal owner of VMware, Michael Dell was the first person Broadcom CEO Hock Tan called to pitch a potential $61 billion tie-up of his company with the virtualization all-star, according to U.S. Securities and Exchange filings.
Michael Dell has been in the loop ever since and stands to add $21 billion to his fortune if the deal is approved. While some VMware channel partners have said they are unclear how VMware fits with Broadcom given its history in hardware and chipmaking, developing VMware’s platform and position in multi-cloud is what Michael Dell said is likely to happen.
“What I heard from them and from Hock is they’re going to invest heavily in the core VMware platform. Certainly, Dell Technologies has had a long partnership with VMware even before the combination with EMC, and that will continue. And VMware continues to be a vital part of the multi-cloud ecosystem,” he said. “VMware has great capabilities. I think you’ll see Broadcom invest in those to continue to grow it.”
Dell has some experience buying VMware. Dell bought the virtualization company along with its purchase of EMC for $67 billion in 2015, then spun out VMware at the end of 2021.
VMware partners like VirtuIT Systems, Nanuet, N.Y., which holds a master services competency, have been in wait-and-see mode since the deal was unveiled last year. CEO Gary McConnell said VirtuIT’s VMware business has been great since then, and he expects it to continue in that direction.
“Regardless of the deal, VMware seems to have great leadership that we’re in constant communication with,” McConnell told CRN. “Although we’d expect it go through, VMware has a bright future regardless of which umbrella it falls under, in our opinion.”
Since the deal was unveiled 10 months ago, Broadcom has consistently said it had expected an acquisition of this size to take time to pass regulatory hurdles around the world, setting an expected closing date of Oct. 31.
“We are making progress with our various regulatory filings around the world, having received legal merger clearance in Australia, Brazil, South Africa and Canada,” Broadcom said in a statement to CRN Monday. “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 inquiry.”
Germany, France, Austria, Denmark, Italy, New Zeland and the U.K. also have granted foreign investment control clearance.
However, the U.K. joined the European Union and the U.S. Federal Trade Commission (FTC) last month in saying it too would carry out an in-depth investigation of how the merger may harm competition.
In mid-February, VMware and Broadcom opted to extend the outside date, the point at which either side can opt out and walk away from the deal. The two agreed to move that deadline from February to May.
That came after the European Commission had said in December it would carry out an in-depth investigation of the deal, with Executive Vice President Margrethe Vestager adding that the agency is concerned that Broadcom may cut off access to VMware for competitors.
Also looming for Broadcom is a decision on the deal by the FTC.
The agency is eight months into a “second request” investigation, a probe that experts have told CRN can take 90 days.
Broadcom previously has tangled with regulators, the European Commission and the FTC. Prior to unveiling its plan to acquire VMware, both agencies had dinged Broadcom for illegal sales practices in offering incentives to customers in exchange for cutting inventory from Broadcom competitors.
That practice earned Broadcom a seven-year settlement agreement with the European Commission, during which time investigators can comb through the company’s sales contracts to ensure it isn’t engaging in anti-competitive behavior.