The takeover should take place in cash and in shares. The price has not yet been fixed and may change, one source pointed out.
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Negotiations on the agreement, together with the agreement of businessman Elon Musk on the takeover of Twitter at the end of last month, show that despite the highly volatile stock market, large deals are still feasible.
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Partly because the market downturn has made takeover targets more accessible and sellers are in some cases more willing to take stocks instead of money in the hope that they will benefit when the market recovers. In addition, private investment companies still have enough cash.
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Broadcom is offering approximately $ 140 per VMware share. This represents a premium of 50 percent compared to Friday’s closing share price. However, it is still below the high of spring 2019, when the company’s shares sold for more than $ 200.
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Negotiations for the agreement come about six months after Dell Technologies set aside its 81 percent stake in VMware. The software company has a strong position in the so-called hybrid cloud market, where large companies combine public cloud services, such as those from Amazon and Microsoft, with their own private networks.
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Dell Founder Michael Dell remains chairman of VMware’s board of directors. Together with the investment company Silver Lake, which helped him turn Dell into a private company in 2013, he owns more than a 50 percent stake in VMware.
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Broadcom grew thanks to acquisitions
Broadcom is a semiconductor giant that grew mainly due to acquisitions. The company is looking for agreements that would help it grow in the enterprise software market. Last year was close to taking over the SAS Institute software company, but in the end the founders changed their minds. Its first major entry into the software market was the 2018 acquisition of CA Technologies for about $ 19 billion.
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Demand for cloud computing, which allows customers to lease computing power instead of investing in their own, has risen sharply in recent years. The first users of these services were start-ups and other companies that did not have the support of their own IT department. Companies across all industries now rely on it.
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