Key Takeaways

● The U.K.'s Competition and Markets Authority (CMA) on Monday cleared Broadcom's $69 billion acquisition of VMware.

● The deal, first announced in May of last year and initially valued at $61 billion, cleared one of its biggest regulatory hurdles this week.

● The merger could help speed up Broadcom's adoption of cloud computing technologies, while giving VMware the resources to fund R&D projects.

The U.K.'s Competition and Markets Authority (CMA) on Monday cleared Broadcom's $69 billion acquisition of Palo Alto, CA-based cloud computing company VMware, concluding a two-phase investigation that began in March. An independent panel of regulators ruled that the merger would not stifle competition in the supply of server hardware components in the U.K.

The deal, first announced in May of last year and initially valued at $61 billion, cleared one of its biggest regulatory hurdles this week.

Regulators in the European Union (EU), Australia, Canada, Brazil, Israel, South Africa, and Taiwan have already cleared the deal, while U.S. regulators could soon follow suit as an FTC-mandated pre-merger waiting period has expired.

With the Hart-Scott-Rodino pre-merger waiting period now lapsed with no apparent further inquiry from the FTC, “there is no legal impediment to closing under U.S. merger regulations it expects to close the VMware purchase on Oct. 30",Broadcom said in an Aug. 21 press release.

A merger with VMware would enable Broadcom, one of the world's biggest semiconductor companies by revenue, to accelerate its adoption of cloud technologies, while giving the former the financial resources and capabilities to fund its research and development (R&D) ambitions. Broadcom's roughly $350 billion market cap is five times that of VMware's $70 billion capitalization.

What happens after that remains anyone’s guess. Rumor has it Broadcom plans to lay off potentially thousands of VMware employees, even before the Broadcom-VMware deal closes. According to heavily redacted documents Broadcom filed with the CMA in May, the company seems to have little faith in VMware and its cloud strategy. If that’s the case, it could be looking to wipe the slate clean and jumpstart its take on cloud with its own experts.

About Broadcom Inc.

Broadcom Inc. (NASDAQ: AVGO), a Delaware corporation headquartered in San Jose, CA, is a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. Broadcom's category-leading product portfolio serves critical markets including data center, networking, enterprise software, broadband, wireless, storage and industrial. Our solutions include data center networking and storage, enterprise, mainframe and cybersecurity software focused on automation, monitoring and security, smartphone components, telecoms and factory automation. 

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