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Broadcom wins approval from UK watchdog for $69 billion VMware acquisition

Written by Thu 20 Jul 2023

Broadcom has won approval from the UK’s Competition and Markets Authority (CMA) for its £53.6 billion ($69 billion) plan to buy VMware, overcoming another obstacle for its acquisition. This is the biggest transaction the CMA has investigated to date.

The computer chip and software maker has been informed that its purchase of the cloud technology company VMware ‘would not substantially reduce competition’ in the supply of hardware components for computer servers in the UK. The deal is also not expected to harm innovation.

The CMA provisionally concluded that the US-based companies have jurisdiction to pursue this merger because the UK turnover of VMware is in excess of their legal threshold of £70 million ($89.9 million) for its last business year. This is not the CMA’s final decision, and welcomes any interested parties to make representations to them on these findings by 9 August, 2023. They will release their final decision in September.

The regulator stated that they looked at a wide range of evidence, including internal business documents and future commercial strategies. Evidence was also gathered from customers, I/O hardware providers, and virtualisation software providers.

Broadcom is expected to pay in cash and stock to acquire VMware, and take on £6.2 billion ($8 billion) of its debt. Broadcom reportedly wants to establish a firmer standing in the cloud computing market.

The purchase of VMware would bring them a step closer to this goal. VMware’s technology currently allows large corporations to blend public cloud access with internal company networks. The cloud technology company has close relations with major cloud companies and providers, including Amazon, Google and Microsoft.

Government departments, telecom operators, major banks, other big businesses, and public bodies rely on Broadcom solutions and VMware software, said the UK regulator.

European Commission approves Broadcom-VMWare acquisition

One week ago, the European Commission also approved the acquisition, recognising the importance of this combination in enabling enterprises to accelerate growth and momentum in the multicloud ecosystem. The potential for increased innovation and competition are also said to be reasons for this approval.

Broadcom provided the European Commission with a technology access remedy that preserves interoperability, which is a core principle that would not have changed as a result of the acquisition.

The acquisition of VMWare has also received legal merger clearance in AustraliaBrazilCanadaSouth Africa, and Taiwan, and foreign investment control clearance in all necessary jurisdictions.

Broadcom expects that the transaction to close in its 2023 fiscal year.

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Written by Thu 20 Jul 2023

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