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Buying VMware will strengthen Broadcom’s position in cloud computing.
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Shares of Cloud Computing Provider
VMware
There was a jolt Monday after the report
Broadcom
Negotiations were underway to buy a software company.
Chip maker Broadcom (ticker: AVGO), which has a market value of about $ 222 billion, is in talks to buy VMware (WMW) worth about $ 40 billion by the time the market closes on Friday, according to a report in The Wall Street Journal. A price is not specified for the cash-and-stock offer, and it is still possible that no agreement will be reached.
VMware shares jumped 14% to 9 109.10 in pre-market trading on Monday. Broadcom is down 2.4%. VMware is down 17.4% this year and Broadcom is down more than 18%, in line with the broader market.
The transaction shows that even though the drop of the S&P 500 went to the doorstep of the market this year, the dealmaking did not die. Broadcom is temporarily looking for a deal after buying Symantec Corp.’s enterprise security unit for 11 billion in 2019. The acquisitions played a key role in Broadcom’s growth strategy, said Chief Executive Hawk Tan at the time.
VMware software allows businesses to integrate public cloud services as offered.
Amazon.com
(AMZN) with their own network. Demand for this specialty has grown significantly as a result of recent corporate scandals.
VMware will report earnings on May 25. Broadcom’s earnings are set for next week.
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