The UK competition authority has said it plans to give the green light to Broadcom’s $69 billion bid for virtualization software giant VMware.
The news comes exactly one week after the European Commission (EC) approved the deal, which almost leaves the US as the last remaining hurdle for Broadcom, with the Federal Trade Commission (FTC) currently investigating the deal.
Diversify
Broadcom’s interest in acquiring VMware, which was first announced last May, represents part of its plans to diversify beyond hardware and expand into enterprise infrastructure software. The main concern until now has been that Broadcom could limit or degrade VMware’s support for Broadcom’s hardware rivals, which include Marvell. Thus, the EC last week approved the agreement on the condition that Broadcom provide guaranteed access and interoperability between VMware and Broadcom’s competitors.
The UK’s Competition and Markets Authority (CMA) has now found that the financial benefit to Broadcom and VMware from restricting access to rivals “would not outweigh the potential financial cost in terms of lost business”. However, unlike the EC which has stipulated that Broadcom must commit to support and interoperability measures for the next 10 years under the direct supervision of a designated trustee, the UK will apparently not implement any such supervision.
“Computer servers—often using products from Broadcom and VMware—play a critical role in enabling us to work at the office or at home or access TV shows or use banking services,” noted Richard Feasey, chairman of the panel he conducted. said the investigation. “That is why it is important that we investigate this deal to ensure that UK businesses continue to benefit from competition and innovation in the supply of server components. After carefully considering a wide range of evidence, we have provisionally found that this agreement would not harm competition.”
The big-money deal, which is $61 billion in equity and $8 billion in debt, will become one of the biggest tech acquisitions of all time. But it will always attract regulatory scrutiny, with Europe first revealing plans for an in-depth investigation in December with the UK following suit four months later.
Now, barring some last-minute appeals from other interested parties, the deal is one step closer to crossing the line. The deadline for responses is August 9, with a final report due by September 12.
