Chip Maker Broadcom to Acquire VMWare for $61 Billion

pcmag.com:

American chip designer and manufacturer Broadcom is set to acquire cloud computing and virtualization specialist VMWare in a deal worth $61 billion.

As Reuters reports(Opens in a new window), Broadcom offered $142.50 (or 0.2520 of a Broadcom share) per VMWare share, which is a 49% premium on the stock price as of yesterday, May 25. It equates to a cash-and-stock deal worth $61 billion, but Broadcom is also set to assume $8 billion-worth of VMWare debt.

Broadcom is probably best known for its networking, data center, and industrial hardware, but its chips make their way in to many products consumers purchase, for example, Raspberry Pi boards all use a Broadcom system on a chip.

VMWare, on the other hand, is a company focused on software and in particular virtualization (a software market it dominates). If you want to run Linux on Windows, or Windows on a Mac, VMWare's software allows you to do so with a few clicks of the mouse. The company also offers virtual server, cloud and identity management, storage, and networking software for the enterprise.

So why is Broadcom buying VMWare? Broadcom already has a software department focused on infrastructure and security solutions, but sees VMWare's products as complementing that line-up(Opens in a new window). In fact, when the deal is complete, the Broadcom Software Group is set to be rebranded as VMWare. According to Raghu Raghuram, Chief Executive Officer of VMware, Broadcom plans to make his company's products "the new software platform for Broadcom."

Someone who will no doubt be very happy about this acquisition is Michael Dell. He split VMWare from Dell last year, and retained a 40% stake in the process. On the other hand, employees at both companies may be a little bit