• Cash-and-stock deal could be announced as soon as Thursday
• Deal value is expected to be more than VMware’s $40-billion market cap as of Friday’s market close
Broadcom Inc (NASDAQ: AVGO) is planning to acquire Michael Dell-backed cloud service provider VMware Inc (NYSE: VMW), which could transform the chipmaker into a diversified tech firm, Reuters reported on Monday, citing people familiar with the matter.
Although the deal term is not known, it is expected that the deal value will be above VMware’s $40.3-billion market cap as of Friday’s market close.
The agreement would rank among the biggest in the tech sector, behind Microsoft Corp’s (NASDAQ: MSFT) nearly $69 billion acquisition of Activision Blizzard Inc (NASDAQ: ATVI) and Dell Technologies Inc’s (NYSE: DELL) $67 billion EMC purchase in 2016.
Shares of Vmware jumped more than 20% to $115 on Monday morning trading session.
Michael Dell, the founder, chairman, and CEO of Dell Technologies, one of the world’s largest technology infrastructure companies, is VMware’s biggest individual stakeholder, owning about 40% after the cloud computing company was spun out of personal computer maker last year.
While the takeover discussions are ongoing, the deal is not imminent, the Reuters report said.
However, CNBC reported that Broadcom could announce a cash-and-stock agreement as soon as Thursday.
Broadcom, which makes an array of electronics and semiconductors used in products ranging from iPhones to telecom networks, would benefit from Vmware’s data centers as a critical source of growth, help enter the cloud computing market, and further diversify its business.
Picture Credit: Bloomberg
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