Semiconductor giant Broadcom has announced today (26 May) that it is buying cloud service provider VMware for $61bn in both cash and stock, in one of the biggest deals of the year.

The deal is expected to close in Broadcom’s 2023 fiscal year. The acquisition will see the Broadcom Software Group rebrand and operate as VMware, which will incorporate Broadcom’s infrastructure and security software as part of an expanded VMware portfolio.

Under the terms of the agreement, VMware shareholders will elect to receive either $142.50 in cash or 0.2520 shares of Broadcom common stock for each VMware share. The deal’s terms have been unanimously approved by the board of directors of both companies.

“VMware has been reshaping the IT landscape for the past 24 years, helping our customers become digital businesses,” VMware CEO Raghu Raghuram said. “Combining our assets and talented team with Broadcom’s existing enterprise software portfolio, all housed under the VMware brand, creates a remarkable enterprise software player.

“Collectively, we will deliver even more choice, value and innovation to customers, enabling them to thrive in this increasingly complex multi-cloud era,” Raghuram said.

Broadcom emerged from Hewlett-Packard in the 1960s and was acquired in 2016 by Avago Technologies. The whole company became known as Broadcom Inc and it moved its corporate headquarters to Silicon Valley in 2017 from Singapore.

Broadcom said the deal will align with its strategy of scaling its software business and offer new growth opportunities. The semiconductor giant took a big leap into the software sector when it acquired enterprise software vendor CA Technologies for almost $19bn in cash in 2018.

“VMware has long been recognized for its enterprise software leadership, and through this transaction we will provide customers worldwide with the next generation of infrastructure software,” Broadcom president Tom Krause said.

“VMware’s platform and Broadcom’s infrastructure software solutions address different but important enterprise needs, and the combined company will be able to serve them more effectively and securely,” Krause added.

The acquisition is the second biggest globally so far this year, just behind Microsoft’s decision to snap up the video game giant Activision Blizzard for $68.7bn.

This is also Broadcom’s second biggest acquisition deal, following its $103bn takeover bid for Qualcomm in 2017. The Qualcomm deal was blocked by US president Donald Trump in 2018 over national security concerns.

10 things you need to know direct to your inbox every weekday. Sign up for the Daily Brief, Silicon Republic’s digest of essential sci-tech news.

The post Chipmaker Broadcom to acquire cloud service giant VMware for $61bn appeared first on Silicon Republic.