Broadcom → VMware

A $61bn cash-and-stock deal — about $69bn including debt — for the virtualisation software company, closed in November 2023 after eighteen months of reviews, after which Broadcom moved VMware's customers to subscription-only licensing and raised prices sharply.

Closed at roughly $69bn including debt, after which Broadcom moved VMware customers to subscription-only licensing.

Value

$61B

Announced

May 2022

Completed

November 2023

Sector

Technology

Deal type

acquisition

Acquirer

Broadcom (United States)

Target

VMware (United States)

Why it mattered

Broadcom under Hock Tan had built a semiconductor group by acquisition and then bought software — CA Technologies in 2018, Symantec's enterprise business in 2019 — on a consistent model: buy a mature product with locked-in customers, cut the cost base, raise prices, and run for cash. VMware, whose software ran most corporate data centres and had been spun out of Dell a year earlier, was the largest application of that model, and the price of about 8 times revenue reflected a business bought for its installed base rather than its growth.

Clearance took the US, the EU (with commitments on interoperability), the UK and, at the last, China; the deal closed a week before its long-stop date. Within months Broadcom ended perpetual licences, consolidated products into bundles and cut the partner programme, and customers reported price increases of several multiples.

What it left behind

A reference case in two directions. For acquirers, the proof that a cash-generating software estate can be bought at scale and repriced, with Broadcom's software revenue and margins rising as forecast. For customers, the clearest recent example of acquisition risk in a supplier — and a reason procurement teams now ask, in every diligence, what happens to the terms if the vendor is bought.