Broadcom To Acquire Vmware In $61 Bln Cash And Stock Deal – Quick Facts

Broadcom Inc. (AVGO), a developer of semiconductor and infrastructure software solutions, announced Thursday its agreement to acquire VMware, Inc. (VMW), an innovator in enterprise software, in around $61 billion cash-and-stock deal. In addition, Broadcom will assume $8 billion of VMware net debt.

Under the deal terms, which has been unanimously approved by the boards of directors of both companies, VMware shareholders will elect to receive either $142.50 in cash or 0.2520 shares of Broadcom common stock for each VMware share.

The shareholder election will be subject to proration, resulting in around 50 percent of VMware’s shares being exchanged for cash consideration and 50 percent for Broadcom stock.

The transaction is expected to be completed in Broadcom’s fiscal year 2023, subject to the receipt of regulatory approvals and other customary closing conditions.

The deal is expected to add approximately $8.5 billion of pro forma EBITDA from the acquisition within three years post-closing.

Based on the closing price of Broadcom common stock on May 25, the total $138.23 per-share consideration represents a 44 percent premium to the closing price of VMware common stock on May 20, the last trading day prior to media speculation regarding a potential transaction.

Following the deal, the current Broadcom shareholders will own around 88 percent of the combined company on a fully diluted basis, and current VMware shareholders will own approximately 12 percent.

In connection with the deal, Broadcom obtained commitments from a consortium of banks for $32 billion in new, fully committed debt financing.

Following the deal closure, the Broadcom Software Group will rebrand and operate as VMware, incorporating Broadcom’s existing infrastructure and security software solutions as part of an expanded VMware portfolio.

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