According to a CNBC report on Monday (23rd), with multiple media reports that chip maker Broadcom (Broadcom) is in talks to acquire cloud computing company VMware, the merger news may be announced as soon as Thursday (26th).
CNBC’s David Faber said on Squawk on the Street that the two sides still need to hammer out some substantive terms and the deal could fall through. According to people familiar with the deal, if the two sides reach an agreement, the acquisition will be cash and stock.
In addition, Dell Technologies (DELL-US) liquidated its 81% stake in VMware last November, but Dell Technologies founder and CEO Michael Dell is still VMware’s chairman and currently holds about 40% of VMware’s shares.
VMware shares soared 20% in early trading on Monday, inspired by the news, but Broadcom shares fell more than 3%. VMware (VMW) rose 20.43% by the time of writing, at $115.26 per share, with a market value of $48.649 billion; Broadcom (AVGO-US) fell 1.62%, tentatively reported at $534.39 per share.
VMWare, with a market value of $40.3 billion as of Friday’s close, could be one of the biggest acquisitions in the tech industry if the merger goes through, a deal just shy of Microsoft’s (MSFT-US) nearly $69 billion takeover of Activision Blizzard (ATVI). -US), and Dell Technologies’ acquisition of EMC for $67 billion.
Broadcom’s acquisition of VMware will further diversify its business from semiconductors into enterprise software, following its continued acquisition of CA Technologies for $18.9 billion in 2018 and Symantec for $10.7 billion in 2019.
AB Bernstein analysts wrote in a note to investors on Monday that Broadcom is particularly looking for sticky, mission-critical enterprise software, with a focus on Fortune 500 companies, adding that recent software A drop in stocks could make such trades easier.
