The EU approves Broadcom's US$61 billion acquisition of VMware
Last May, US chipmaker Broadcom announced its plan to acquire VMware, a cloud computing giant, in a deal worth US$61 billion.
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The backstory: Last May, US chipmaker Broadcom announced its plan to acquire VMware, a cloud computing giant, in a deal worth US$61 billion. This was a big step for Broadcom, both by branching into the enterprise software arena and by being its largest acquisition ever. This deal also ranked as the second-largest global deal announced last year, with Microsoft's US$68.7 billion acquisition of Activision Blizzard taking the top spot.
Fast forward to December, when European antitrust regulators launched a thorough investigation into Broadcom's plan to buy VMware. The worry was that the merging of these two giants could affect competition in the market when it came to certain hardware components.
More recently: While the buyout has been approved in several countries like Brazil, South Africa and Canada, the UK initiated its own in-depth investigation in March, which could take up to six months.
Broadcom's deal faced a lot of scrutiny in April as the European Commission threatened to block the acquisition unless the company came up with some solutions to these concerns. The commission worried that the merger could lead to higher prices, lower quality and reduced innovation for business customers by restricting that market competition.
The development: Now, the EU has given Broadcom the green light for the deal. To address those concerns, Broadcom offered some solutions that convinced the EU authorities to give the thumbs-up. Essentially, Broadcom promised rival Marvell and other competitors access to tools, materials and support to help them develop and certify third-party storage adapters called Fibre Channel Host-Bus Adapters (FC HBAs). The company also granted open-source access to the source code for both present and future FC HBA drivers. Even though the EU has given the go-ahead, the US and the UK still have to give their approval.
Key comments:
"The commitments offered by Broadcom will enable its only rival Marvell, to continue competing on equal footing and ensure a similar protection for any future entrants," said EU antitrust chief Margrethe Vestager in a statement.
"We continue to make progress with our various regulatory filings around the world, having received legal merger clearance in Australia, Brazil, Canada, the European Union, South Africa and Taiwan and foreign investment control clearance in all necessary jurisdictions," said Broadcom in a statement.
"The CMA has referred the anticipated acquisition by Broadcom Inc. of VMware, Inc. for an in-depth investigation, on the basis that, on the information currently available to it, it is or may be the case that this Merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom," said the UK Competition and Markets Authority (CMA) in a statement in March.
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