CMA greenlights $69bn Broadcom-VMware merger

The UK’s Competition and Markets Authority (CMA) has given Broadcom the go ahead for its $69 billion merger with VMware following the conclusion of a Phase 2 investigation.

In March, the authority announced it would be investigating the proposed takeover amid concerns such deal could enable Broadcom to “harm its rivals” by preventing them from being able to supply VMware-compatible hardware components and “reduce competition and ultimately choice” for customers.

The concerns prompted referral of the deal to a Phase 2 investigation which was conducted by an independent panel.

The second phase investigation provisionally found that Broadcom’s proposed purchase of VMware would not substantially reduce competition in the supply of server hardware components in the UK.

Commenting on its findings, Richard Feasey, chair of the independent panel carrying out the Phase 2 inquiry, said: “In this case, having carefully considered the evidence and found no competition concerns, we have concluded the deal can go ahead.”

The deal also faltered with the EU Commission, which held concerns that by buying VMware, Broadcom would restrict competition in hardware markets and harm rivals such as Marvell, which develops similar hardware to Broadcom.

However, the deal in the EU was greenlit in July after Broadcom chief executive Hock Tan met with senior EU Commission officials, submitting a list of proposals to quell concerns the commission held over interoperability issues.

The commission subsequently said the deal could go ahead so long as Broadcom addressed its concerns about interoperability and access.

The CMA said that the Broadcom-VMware deal’s valuation consists of $61 billion in equity and the assumption of $8 billion of debt.

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