Broadcom announced Thursday that it will buy cloud computing giant VMware for $61 billion to offer its enterprise customers “greater choice and flexibility to address the most complex IT infrastructure challenges.”
The purchase, in particular, will be carried out through a transaction of cash and shares valued at 142.50 dollars per share. Broadcom will also take over VMware’s $8 billion net debt. The integrated circuit manufacturing company expects the VMWare acquisition to result in pro forma revenue of more than $40 billion, leading to 49% growth in software-related earnings.
Broadcom VMware deal will become the third-largest in the history of technology. It will sit behind the 2015 merger of EMC Corp and Dell and Microsoft’s purchase of Activision Blizzard earlier this year.
As part of the acquisition, Broadcom Software Group will be renamed VMware, while the “new” VMware will continue to operate under the Broadcom flag. VMware shareholders will be able to choose between $142.50 in cash or 0.252 Broadcom shares per share.
The transaction is expected to be completed in 2023. In the meantime, VMware may negotiate its sale with other companies at least up to 40 days from the date of execution of the definitive agreement. The period, therefore, will expire on July 5.