The U.K.’s competition authority intends to approve Broadcom’s $69 billion offer for virtualization software titan VMware.The news comes precisely one week after the European Commission (EC) approved the deal, leaving the United States as the last remaining obstacle for Broadcom. The Federal Trade Commission (FTC) is currently conducting an investigation into the deal.
Diversify
Broadcom’s initial interest in acquiring VMware was announced in May of last year as part of its strategy to diversify beyond hardware and into enterprise infrastructure software. To date, the primary concern has been that Broadcom could limit or degrade VMware’s support for Broadcom hardware competitors, such as Marvell. Thus, the EC approved the transaction last week on the condition that Broadcom guarantees VMware access and interoperability with Broadcom’s competitors.
The Competition and Markets Authority (CMA) of the United Kingdom has determined that the financial benefit to Broadcom and VMware of restricting access to competitors “would not outweigh the potential financial cost in terms of lost business.
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However, unlike the European Commission, which has mandated that Broadcom commit to support and interoperability measures for the next ten years under the direct supervision of a trustee, it appears that the United Kingdom will not enforce such oversight.
“Computer servers—frequently utilizing Broadcom and VMware products—play a crucial role in allowing us to work from home or the office, watch television and use banking services,” the investigation’s chair, Richard Feasey, noted.
Therefore, it is essential that we investigate this transaction to ensure that British businesses continue to benefit from competition and innovation in the supply of server components. After meticulously reviewing a wide range of evidence, we have determined that this transaction will not harm competition.
The massive acquisition, consisting of $61 billion in equity and $8 billion in debt, is expected to become one of the largest technology acquisitions in history. But it was always going to attract regulatory scrutiny, with Europe announcing plans for a comprehensive investigation in December and the United Kingdom following suit four months later.
Now, barring any last-minute objections from other interested parties, the transaction is one step closer to completion. The final response deadline is August 9, and a final report is due by September 12.
