Cloud News
Broadcom’s $61B Buy Of ‘Iconic’ VMware: 5 Big Things To Know
Mark Haranas
From what Dell CEO Michael Dell has to say to a ‘go-shop’ provision in the deal allowing VMware to look for other suitors, here are the five biggest things to know about Broadcom’s historic $61 billion move to acquire VMware.
Details Of The Deal
Broadcom will acquire all of the outstanding shares of VMware in a cash-and-stock transaction that values VMware at approximately $61 billion, based on the closing price of Broadcom common stock on May 25, 2022.
The deal has been unanimously approved by the boards of directors of both companies. Broadcom will assume $8 billion of VMware’s net debt.
The transaction is expected to add approximately $8.5 billion of pro forma EBITDA from the acquisition within three years post-closing.
Under the terms of the agreement, VMware shareholders will elect to receive either $142.50 in cash or 0.2520 shares of Broadcom common stock for each VMware share.
The shareholder election will be subject to proration, resulting in approximately 50 percent of VMware’s shares being exchanged for cash consideration and 50 percent being exchanged for Broadcom common stock.
Based on the closing price of Broadcom common stock on May 25, 2022, the total $138.23 per-share consideration represents a 44 percent premium to the closing price of VMware common stock on May 20, 2022—the last trading day prior to various media outlets reporting on the deal—and a 32 percent premium to VMware’s unaffected 30-day volume weighted average price.
Upon closing of the transaction, current Broadcom shareholders will own approximately 88 percent and current VMware shareholders will own approximately 12 percent of the combined company on a fully diluted basis.
The transaction is subject to the receipt of regulatory approvals and other customary closing conditions, including approval by VMware shareholders.
Following the closing of the transaction, the Broadcom Software Group will rebrand and operate as VMware, incorporating Broadcom’s existing infrastructure and security software offerings as part of an expanded VMware portfolio.
The Takeaway: With both boards of directors approving the deal and Broadcom making the correct financial move to make the deal, it is highly likely the transaction will be completed either in the summer or fall of 2022.
