Broadcom has successfully concluded its $61 billion acquisition of VMware after undergoing rigorous scrutiny from regulators, as revealed in an official press release.
The acquisition, which received approval from China with certain restrictions, marks a significant milestone for the network chip manufacturer, as it has now secured all the necessary regulatory clearances.
The press release stated, “Broadcom has received legal merger clearance in Australia, Brazil, Canada, China, the European Union, Israel, Japan, South Africa, South Korea, Taiwan, the United Kingdom, and foreign investment control clearance in all necessary jurisdictions. We are excited to welcome VMware to Broadcom and bring together our engineering-first, innovation-centric teams.”
Unlike some of the more high-profile tech acquisitions involving companies like Microsoft and Activision, the Broadcom/VMware deal may not have captured the same level of attention. However, Broadcom, based in San Jose, plays a pivotal role in shaping the internet’s infrastructure with its products widely utilized in data centers, cloud services, and network infrastructure.
On the other hand, VMware specializes in virtualization and cloud computing software, enabling corporations to securely connect local networks with public cloud access.
The strategic fit between Broadcom and VMware made the deal a logical move, but it also subjected the acquisition to scrutiny from regulators across various regions. The European Commission, for instance, expressed concerns about potential anticompetitive practices, fearing that Broadcom might limit interoperability between rival hardware and VMware’s server virtualization software.
There were also concerns about Broadcom preventing or degrading access to VMware’s software or bundling it with its own hardware products.
Despite these challenges, Broadcom secured approval from the European Union during the summer.
This was achieved by providing IP access and source code for key network fiber optic components to its main competitor, Marvell. The EU concluded that fears of VMware bundling were unfounded and that Broadcom would still face competition in the storage adapter and NIC markets.
Tensions between China and the U.S. added another layer of complexity to the deal, especially after the Biden administration introduced new rules in October, making it more challenging to export high-end chips to China. However, the recent announcement of approval in the Chinese market came with specific conditions.
China imposed requirements on how Broadcom sells products locally, particularly emphasizing the need to ensure interoperability between VMware’s server software and rival hardware, as outlined in the regulator’s statement.
