RESEARCH TRIANGLE PARK – VMware, which is looking to fill more than 300 jobs across North Carolina, will be bought by Broadcom for a whopping $61 billion in cash and stock, Broadcom announced early Thursday.
In addition to the acquisition of the company, under which Broadcom would acquire all outstanding shares of VMWare stock, Broadcom would also assume $8 billion of the existing VMware net debt.
It’s one of the biggest tech acquistions in history in terms of dollars, exceeded only Microsoft’s $69 billion deal for Activision Blizzard and Dell’s $67 billion buy of EMC, according to CNBC.
The statement from Broadcom notes that the deal will accelerate the software scale and growth opportunities for the company. Broadcom anticipates adding $8.5 billion of pro forma EBITDA [earnings before interest, taxes, depreciation, and amortization] from the transaction within three years of closing the deal.
Buying the company, keeping the brand
But while Broadcom will be the acquirer in the deal, once the transaction occurs, the company will rebrand and operate as VMware, the statement noted.
“Building upon our proven track record of successful M&A, this transaction combines our leading semiconductor and infrastructure software businesses with an iconic pioneer and innovator in enterprise software as we reimagine what we can deliver to customers as a leading infrastructure technology company,” said Hock Tan, Chief Executive Officer of Broadcom.
Broadcom had been thought to be a potential acquirer for the privately-held, Cary-headquartered SAS last year. But SAS co-founder and CEO Jim Goodnight sent a note to all SAS employees within a few weeks of that report noting that the company was not for sale and talks with Broadcom had concluded. Now, though, SAS is preparing for a possible initial public offering.
Under the terms of the deal between Broadcom and VMware, VMWare shareholders may elect to receive either $142.50 in cash or 0.2520 shares of Broadcom common stock for each share of VMware stock.
Michael Dell owns 40.2% of all outstanding VMware shares, and signed a support agreement to vote in favor of the transaction, according to a statement. Dell is the chairman of the VMware board of directors.
“Together with Broadcom, VMware will be even better positioned to deliver valuable, innovative solutions to even more of the world’s largest enterprises,” said Dell in a statement. “This is a landmark moment for VMware and provides our shareholders and employees with the opportunity to participate in meaningful upside.”
Broadcom noted in a statement that it has obtained a commitment to borrow $32 billion in debt to finance the deal.