Broadcom takeover deal for VMware faces no rival bids

UPDATED Broadcom's proposed buyout of VMware looks set to proceed after the "go-shop" period for alternative offers expired without any rival bidders coming forward.

The move could mean bad news for many customers if Broadcom follows a policy of focusing only on the needs of the largest corporate accounts.

Broadcom announced its intention to acquire VMware on May 26 in an agreement that valued the cloud and virtualization company at $61 billion. It is subject to the usual regulatory approvals and other closing conditions, including approval by VMware shareholders, but the merger Ts&Cs also included a "go-shop" provision under which VMware could solicit alternative proposals during a 40-day period following the signing.

That 40-day period expired at 23:59 Pacific Time on July 5, but no rival bidder has emerged to offer a superior proposal, according to Bloomberg, which cited loquacious sources said to be familiar with the matter. This clears the way for the Broadcom takeover to proceed, a transaction that is expected to complete in Broadcom's fiscal 2023, which runs from November 2022 until October 2023.

 

We do note that the European Union is reportedly investigating the multi-billion-dollar deal, so that may or may not throw a spanner in the works.

The sale has been met with mixed reactions from VMware customers, some of whom fear Broadcom will cut back on research and development costs and focus on extracting revenue from the largest customer accounts.

As reported by The Register last month, analyst companies including S&P Global Market Intelligence and Gartner have offered negative evaluations of Broadcom's takeover. Their conclusions were based on surveys of VMware customers who fear the potential impact on software licensing terms and conditions, with 56 percent expressing negative sentiments and over a quarter of them rating their response to the purchase as "extremely negative."