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November 23, 2023

VMware CEO departs as Broadcom finally closes $61bn takeover

It may have taken 18 months, but the chipmaker has finally got its hands on the virtualisation specialist. Changes are already afoot.

By Matthew Gooding

Broadcom has finally completed its $61bn takeover of virtualisation specialist VMware after China’s antitrust regulator gave its approval to the acquisition. As a result, VMware CEO Raghu Raghuram has announced he will leave the business.

VMware is now part of Broadcom. (Photo by Michael Vi/Shutterstock)

Chipmaker Broadcom announced the completion of the deal yesterday, having first announced its intention to purchase VMware in May 2022. Since then it has faced a series of regulatory hurdles, with its competitors raising concerns that VMware’s customers may be forced to buy Broadcom’s other products and services.

How Broadcom and VMware will work together

While the two companies are not an obvious fit in terms of technology, Broadcom CEO Hock Tan said the acquisition will allow Broadcom and VMware to “come together and have the scale to help global enterprises address their complex IT infrastructure challenges by enabling private and hybrid cloud environments and helping them deploy an ‘apps anywhere’ strategy.

Tan said: “Our goal is to help customers optimize their private, hybrid and multi-cloud environments, allowing them to run applications and services anywhere.”

He has wasted no time reorganising VMware into four divisions, focusing on its VMware Cloud Foundation software stack, Tanzu, which allows VMware users to run and manage multiple Kubernetes clusters across public and private clouds, software-defined edge and application networking and security.

All this means there is no place for Raghuram, who will leave his executive role but stay on as a “strategic advisor” to Tan.

Writing on LinkedIn, Raghuram, who has worked for VMware for 20 years and has been in his current post since May 2021, said: “It has been my absolute privilege and honour to lead VMware for the last three years. During this time, we have navigated a dizzying journey together that spans the full lifecycle of a business – from raising debt financing to spinning off from Dell and operating as a standalone public company, to being acquired by Broadcom and executing through a complex regulatory process to finally arrive at this milestone moment in VMware’s history.”

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He added: “I plan to take a short break, rejuvenate, and then find a new and impactful mission into which I can pour my energy and passion.”

The long regulatory road for Broadcom’s VMware deal

Broadcom had hoped to close the acquisition of VMware by October 30, having gained approval from regulators in nine territories including Europe and the UK.

However, it was reported that China’s State Administration of Market Regulation threatened to hold up the deal amid continuing tensions between Beijing and the US government, which has exposed strict export controls on advanced technologies, including semiconductors, being shipped to China. But the Chinese regulator gave the deal the green light on Tuesday, paving the way for it to be completed.

As well as the $61bn purchase price, Broadcom will assume debts of $8bn as part of the takeover.

VMware has been operating as an independent company since it split from its previous owner Dell in November 2021. When its potential acquisition by Broadcom was revealed in May, rival hardware manufacturers complained that it may lead to reduced interoperability between their products and VMware’s software. This led to various antitrust investigations launched around the world.

Read more: Adobe buys its first generative AI start-up


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