Broadcom has successfully concluded its colossal $61 billion acquisition of VMware after undergoing rigorous scrutiny from regulatory bodies, as disclosed in an official press statement. Notably, China's recent approval of the acquisition, albeit with additional constraints, marked the final nod needed for the network chip manufacturer.
The company's announcement highlighted, "Broadcom has obtained legal clearance for the merger in Australia, Brazil, Canada, China, the European Union, Israel, Japan, South Africa, South Korea, Taiwan, the United Kingdom, and foreign investment control clearance across all requisite jurisdictions." Expressing enthusiasm, the statement continued, "We eagerly welcome VMware into the Broadcom family, uniting our engineering-centric, innovation-driven teams."
While the Broadcom/VMware transaction may lack the headline-grabbing allure of other major tech acquisitions involving giants like Microsoft and Activision, it holds immense significance. Broadcom, headquartered in San Jose, plays a foundational role in much of the internet, providing crucial infrastructure for data centers, cloud service providers, and network architecture. In contrast, VMware specializes in creating virtualization and cloud computing software, facilitating secure connections between local networks and public cloud access for corporations.
This strategic alignment made VMware an attractive prospect for Broadcom, but it also drew the attention of regulators across various regions. The European Commission, for instance, expressed concerns about Broadcom potentially impeding competition by restricting interoperability between competing hardware and VMware's server virtualization software. Additionally, worries surfaced regarding Broadcom's ability to hinder or diminish access to VMware's software, or integrate VMware with its proprietary hardware products.
Despite these apprehensions, Broadcom secured approval from the European Union during the summer. The approval was largely facilitated by granting Marvell, its primary competitor, IP access and source code for critical network fiber optic components. The European Union concluded that fears of VMware bundling were unfounded, emphasizing that Broadcom would still face competition in the storage adapter and NIC markets.
Tensions between China and the United States also cast a shadow of uncertainty over the deal, especially following the Biden administration's introduction of new regulations in October, making the export of high-end chips to China more challenging. However, the announcement of approval in the Chinese market came yesterday, accompanied by specific conditions imposed by China. Notably, Broadcom had to ensure the interoperability of VMware's server software with rival hardware, as outlined in the regulatory statement from China.