Broadcom’s Proposed $61B VMware Buy Has 40-Day ‘Go Shop’ Provision
Broadcom will finance $32 billion of its proposed $61 billion VMware buy for cash and stock with new, "fully committed" debt financing from a “consortium of banks,” said the buyer Thursday. Broadcom also agreed to assume $8 billion in VMware…
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debt, it said. The transaction is expected to close during Broadcom’s fiscal year ending October 2023. The deal includes a 40-day “go shop” provision enabling VMware to solicit bids from other potential buyers, it said. VMware Chairman Michael Dell has agreed to vote in favor of the deal, “so long as the VMware board continues to recommend the proposed transaction,” Broadcom said. Dell controlled 97.4% of VMware’s voting power as of a May 2021 proxy filing at the SEC. The VMware buy will take Broadcom and its business “to the next level,” said Broadcom CEO Hock Tan on a Thursday call with investors. “By adding VMware, we will bring significant scale to Broadcom’s software business.” Broadcom’s “target” is for VMware to contribute EBITDA of $8.5 billion “once we have fully integrated the company onto our platform,” said Tan. VMware on Thursday reported 3% revenue growth in its fiscal Q1 ended April 28 to $3.09 billion but canceled its quarterly earnings call due to the Broadcom transaction.