Broadcom has confirmed it will acquire cloud computing company VMware for $61 billion in cash and stock.
This acquisition will be the chipmaker's biggest step in diversifying its business to the enterprise class.
For information, VWware can be said to be a leader and is still a big name in the field of virtualization software, which allows users to run various applications on the server.
Then compared to other acquisitions in the world, only lost to the acquisition of Activision Blizzard by Microsoft worth USD 68.7 billion.
Broadcom acquired VMware at a bid of USD 142.50, or 49% higher than the last price of VMware shares at the close of the market before this agreement was revealed on 22 May.
As part of this agreement, Broadcom will also bear VMware's net debt of USD 8 billion. The agreement saw Broadcom shares rise 3% and VMware up 2%.
Broadcom was able to acquire VMware because in 2021 Dell Technologies divested its ownership of VMware, which was previously 40% owned by Michael Dell and 10% owned by Silver Lake.
This acquisition is predicted to increase Broadcom's revenue from the software side to around 45 percent of its total revenue. They will immediately enter the ranks of top software companies, at least that's the prediction of Daniel Newman, an analyst from Futurum Research.
"Having (a company) like VMware... will open a lot of significant doors to their portfolio that are not currently open to them," explains Newman.
To make this acquisition, Broadcom has pocketed commitments from a consortium of banks to obtain funding of USD 32 billion.
In 2018, Broadcom had a bombastic plan, namely to acquire Qualcomm. However, Broadcom's intentions were blocked by the then US President, Donald Trump, for reasons of national security.
Since then, Broadcom has been 'shopping' a number of other companies. Call it CA Technologies which was acquired for USD 18.9 billion and the security division of Symantec for USD 10.7 billion. They also had time to explore the possibility of acquiring the SAS Institute, but the intention was not continued.