UK Competition Authority approves merger of Broadcom and VMware

The UK Competition and Markets Authority (CMA) has approved a deal to acquire U.S. semiconductor maker Broadcom, virtualization and cloud infrastructure technology developer VMware. About it reported on the British government website.

The deal was approved after a two-phase investigation. Following a Phase 1 investigation, the CMA identified competition issues requiring in-depth consideration. In Phase 2, the IC conducted an in-depth investigation, reviewed new evidence and stakeholder feedback, and tentatively determined that Broadcom’s proposed purchase of VMware would not materially reduce competition in the UK server component supply market.

“Broadcom and VMware are US companies that provide hardware and software used by thousands of businesses and governments in the UK. Even if the UK market represents a small fraction of the total merger sales, it is the CMA’s job to scrutinize such deals to make sure they do not harm competition in the UK. In this case, after carefully reviewing the evidence and finding no competition issues, we have concluded that a deal can be made,” concluded Richard Fisi, chairman of the Phase 2 Independent Commission of Inquiry.

The Broadcom/VMware deal is valued at $69 billion: $61 billion in equity and $8 billion in assumed debt (based on the closing price of Broadcom common stock on May 25, 2022). This is the largest purchase that the CMA has investigated.

Broadcom is a global technology company that manufactures and sells hardware components used in computer servers. VMware sells software products and services that help servers run more efficiently.

In 2018 Broadcom withdrew an offer to buy the American microchip maker Qualcomm due to the blocking of the deal by US President Donald Trump. Trump explained the decision by saying that Broadcom could “take actions that threaten US national security” as a result of the deal. The deal was valued at $117 billion.