What VMware Workers Need To Know If Broadcom Deal Closes
“It’s OK for us to have some questions and concerns based on what has happened in the past,” VMware CEO Raghu Raghuram tells employees.
Broadcom Gets Out Of Heavy Debt Quickly
Broadcom has borrowed large sums before. This time it is planning to go into debt to the tune of $32 billion in order to buy VMware, which it is expecting to borrow from several banks, should the deal go through.
In 2013, when Broadcom – at the time called Avago -- bought LSI for $6.6 billion in cash it took six quarters for it to reduce its debt to EBITDA ratio from 4.4x to 1.2x. When Avago bought Broadcom for $37 billion in 2015 and rebranded as Broadcom, the newly combined company took on $9 billion in debt. Yet within five quarters it had reduced its debt to EBIDTA ratio from 3.8x to 1.7x.
In 2018, Broadcom bought CA Technologies, levering it up to 3.2x which it pulled down to 2.6x in four quarters. When Broadcom bought Symantec in 2020 it funded the entire $10.7 billion deal with debt, launching it to a 3.6x debt to EBITDA ratio which, in about two years, it has now reduced to 2.1x.
Broadcom included this information in an investor packet to show how quickly it has executed on its path to profitability when it took over those companies.