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VMware (VMW) Soared 23% on Buyout Talks With Broadcom

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Updated 23 May 2022

Key points:

  • VMW shares jumped over 20% on news that the company has caught the eye of chipmaker Broadcom
  • The deal could be worth up to $50B, but no normal announcement has been made by either company
  • Big tech deals are still whirring away despite lower valuations and recent selling

The tech sector might look temporarily disheveled as stocks sell off, valuations drop and investors start to look elsewhere, but still the markets are seeing high-value deals amongst some of big tech’s most prominent names, with the industry whirring away as normal. Today, famed chipmaker Broadcom has entered buyout talks with software group VMware, a deal that would generate a huge windfall for the company’s largest shareholder Michael Dell. The deal would mean the semiconductor group shifting to a more flexible, diversified tech company – in a deal that could be worth up to $50B.

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Takeover interest for VMware has grown in recent years as the company’s share price slowly depreciated. Still one of the most prized companies in the cloud computing sector, VMware is deservedly a focus for tech buyout strategies. 

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VMware and Broadcom are yet to make any public announcement regarding the talks, but it was enough to send VMW stock soaring over 20% in Monday premarket trading. The deal would result in a sizable payout for personal computer billionaire Michael Dell, who acquired the company in 2016 alongside private equity firm Silver Lake. The deal was one of the largest in tech history, with VMware used as collateral for more than $50B in financing.

Broadcom CEO Hock Tan has been on the hunt for a software buyout since his attempt at buying Qualcomm in 2018 was blocked by Donald Trump over national security concerns. The VMware deal underlines the fact that despite tech’s recent suffering, the embers are burning as strong as ever. The deal would follow recent takeovers from private equity firm Thoma Bravo, as well as Microsoft’s takeover of Activision Blizzard.