Broadcom reportedly in talks to buy VMware

Chip maker Broadcom Inc. is in talks to buy cloud computing company VMware Inc., according to several reports Sunday night.

Bloomberg News, Reuters, the New York Times and the Wall Street Journal reported on the ongoing talks but did not mention the purchase price; starting Friday, VMware VMW,
+ 0.80%
had a market capitalization of about $ 40.3 billion, while Broadcom was valued at about $ 222 billion.

Reports say talks are ongoing and no agreement may be reached.

Broadcom AVGO based in San Jose, California,
It has long been reported that it has been looking for a major software acquisition; his latest major deal was the purchase of nearly $ 11 billion from Symantec Corp.’s enterprise security business. in 2019. Broadcom bought Brocade Communications in 2016 for $ 5.9 billion and CA Inc. in 2018 for about $ 18 billion.

“M&A has played a central role in Broadcom’s growth strategy, and this transaction represents the next logical step in our strategy,” Broadcom CEO Hock Tan said after the Symantec deal in 2019.

Broadcom exceeded Wall Street estimates when it reported first-quarter fiscal gains in March. The company plans to report second-quarter earnings on June 2.

Last year, Dell Technologies Inc. DELL,
it eventually split its majority stake in VMware. In its latest earnings report in February, VMware, based in Palo Alto, California, exceeded earnings expectations but lowered its outlook for the current quarter. It is expected to report first-quarter earnings on Thursday.

Broadcom shares have fallen 18% so far, while VMware is down 17%, roughly in line with the S&P 500 SPX.
+ 0.01%
An 18% drop this year.

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