Chipmaker Broadcom has announced that it agrees to acquire cloud computing company VMware to the tune of $61 billion in a cash-and stock deal. This is Broadcom’s most significant shift towards diversifying its business into the enterprise software industry.
The deal offers $142.50 per VMware stock, which comes out to an approximate premium of 49% over the stock’s closing price on the last close before reports of a deal began to break on May 22. Broadcom’s shares are up 3% and VMware is up 2%. As part of the deal, Broadcom will also adopt VMware’s $8 billion net debt.
Last year, Dell Technologies spun out VMware, which Michael Dell owns 40% stake, and his financial backer Silver Lake, owns 10% - both voted in favor of the deal.
VMware’s offer from Broadcom was unsolicited, and so the company will be allowed to solicit offers from other bidders for 40 days as per its agreement with Broadcom.