World-renowned semiconductor and software maker Broadcom is set to receive a big boost on Wednesday as the European Union’s (EU) competition regulator is expected to approve the tech giant’s highly anticipated $61 billion acquisition of cloud-computing giant VMware.
The news, reported by Bloomberg on Tuesday, comes after months of negotiations between Broadcom and the EU’s antitrust board, and is conditioned on Broadcom’s acceptance of certain behavioral remedies and promises to import interoperability standards into its technologies, as well as an agreement with the rival Marvell Technology.
The move will bring together two of the biggest players in the tech industry, with Broadcom currently trading at over $489 billion on the NASDAQ exchange and VMWare a market leader in the cloud industry. The acquisition is seen by many as a landmark deal in the computing space and as setting the pace for future deals in the industry.
“We are pleased that the European Commission has reviewed this important transaction and is now prepared to approve it,” said Hock Tan, Broadcom’s chief executive in a statement.
Read more: EU May Give Early Greenlight To Broadcom VMware Deal
Tan, who is known for his highly acquisitive approach to deal-making, added that “interoperability is key to the success of our products and we remain committed to providing customers with access to the highest quality technology available on the market.”
The consortium, which includes Broadcom’s other shareholders, is due to meet on Wednesday to discuss the proposed terms of the deal, which if approved will allow Broadcom to further diversify its tech portfolio and broaden its global reach.
The Bloomberg report further states that the deal is also being scrutinized by UK’s Competition and Markets Authority, and the U.S. Federal Trade Commission (FTC). Last month, a U.S. federal judge in San Francisco denied a preliminary injunction to block Microsoft’s $69 billion acquisition of Activision (ATVI), a ruling that was seen by investors as a big win for the FTC, potentially impacting the regulator’s efforts to block the Broadcom/VMware deal.
Under the terms of the proposed acquisition, Broadcom has agreed to buy VMware in May 2022, and keep the company’s software operational with hardware from its rivals. The ability to keep the VMware’s software functional with hardware from other companies has been a major point of contention for competition authorities, with Tan emphasizing the need for firms “to virtualize every piece of hardware that exists in a data center.”
“The minute you start degrading, discriminating [or] deprecating pieces of hardware, you just shoot yourself in the foot,” he added in a recent interview with the Financial Times.
The European Commission will issue an official statement on Broadcom’s acquisition of VMware on Wednesday. If approved, the deal will allow the tech giant to further expand its global reach and become one of the largest software and semiconductor companies in the world.
