Broadcom Inc. agreed to buy cloud computing giant VMware Inc. for approximately $61 billion in one of the largest technological mergers in history, transforming the chipmaker into a more powerful software force.
According to a statement issued on Thursday, VMware stockholders can choose between receiving $142.50 in cash or 0.2520 shares of Broadcom stock for each VMware share.
The offer is around 44 percent higher than VMware’s closing price on May 20, the last trading day before Bloomberg News reported prospective purchase talks.
The acquisition is the largest ever for a chipmaker and continues Broadcom CEO Hock Tan’s acquisition binge, which has resulted in one of the industry’s largest and most diverse organizations.
VMware enhances Broadcom’s software offerings, which has been a key component of Tan’s strategy in recent years. In 2018, he purchased corporate software producer CA Technologies, then in 2019, he acquired Symantec Corp.’s enterprise security unit.
Broadcom’s offer, which comes during a tech stock market dip, has the backing of key VMware owners Michael Dell and Silver Lake, and includes a so-called go-shop mechanism that allows VMware to pursue competing bids.
Broadcom, one of the most expensive chip companies, offers components for everything from the iPhone to industrial machinery.
However, data centers — the vast server hubs that underpin cloud computing services — are driving some of its most significant growth, and stockpiling software allows it to better serve that market.
