A major acquisition is underway in the tech sector as computer chip and software maker Broadcom is set to buy cloud technology company VMWare. The deal is estimated at around $61 billion, making it one of the biggest deals in the current market situation. It will be an even bigger deal than Elon Musk’s proposed move to buy Twitter for around $44 billion. Broadcom is already well known for manufacturing computer chips, but this deal will strengthen their position in the cloud computing market as it allows them to combine public cloud access with internal networks, according to the Associated Press.
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VMware shareholders will have the choice of $142.50 in cash for each of their shares or 0.2520 of a common share of Broadcom in exchange for existing ones. A rebranding is also planned after the proposed takeover and the company will take on $8 billion in debt.
Broadcom has already started preparing the financing for the massive acquisition by approaching a consortium of banks. The banks will provide fully committed debt financing of $32 billion.
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According to an Associated Press report, 12% of the company will remain in the hands of VMWare shareholders, while the deal will include 88% for Broadcom. The deal has already been approved and is expected to close by 2023. This will be a new venture for Broadcom as cloud technology has become a massive market and it will be very good for their diversification.
(With agency contributions)