One Step Closer: VMware Stockholders Say Yes to $61B Broadcom Buy

Dell Technologies’ Michael Dell

Broadcom’s pending acquisition of VMware just met another milestone.

Last Friday, VMware stockholders approved the $61 billion deal. That moves things forward for Broadcom to wrap up the purchase. The company plans to do just that its 2023 fiscal year, which started on Nov. 1.

VMware, per to its most recent annual report, has 3,809 shareholders. The most well-known is Michael Dell, founder of Dell Technologies and chairman of the VMware board. He stands to rake in more than $26 billion once Broadcom closes the VMware transaction, according to a VMware filing with the Securities and Exchange Commission.

After Dell, institutional investors comprise most of VMware’s shareholders. Those include Silver Lake Management (which helped Dell buy EMC Corp. in 2016), Dodge & Cox, The Vanguard Group and Swedbank Robur Fonder AB, according to MarketScreener.

VMware’s Zane Rowe

VMware’s Raghu Raghuram

Other individuals owning a significant number of VMware shares include CEO Rangarajan Raghuram. He holds almost 265,000. The next-closest is Zane Rowe, VMware’s chief financial officer and executive vice president, with nearly 182,000. That data comes from GuruFocus. Of interest is that Raghuram and Rowe rank as two of the VMware executives who would collect additional millions if they leave the company once the Broadcom acquisition closes. Several other key leaders are part of that possible deal, too.

Broadcom Seeking to Fast-Track Other Approvals

This latest step in the Broadcom-VMware approval process follows Broadcom’s efforts in October to speed up matters. Last month, reports surfaced that Broadcom aimed to fast-track antitrust consent from the European Union. The company says the size of other cloud providers — namely, Amazon Web Services, Microsoft Azure and Google Cloud — is so significant that combining Broadcom and VMware will not result in a competitive imbalance. As such, a second round of approvals is unnecessary, Broadcom is arguing.

“”For the Commission to go to phase two, there has to be a real competition problem — horizontal, vertical, foreclosure risk — and I think we can show those risks don’t really exist in this case,” an unnamed source told Reuters.

Now, with VMware shareholders saying yes to the deal, Broadcom has jumped a key hurdle in the acquisition chain of command.

What VMware Will Do For Broadcom — And Vice Versa

Broadcom’s Hock Tan

If the VMware transaction does close, it will mark Broadcom’s entry into enterprise software. The massive company has built itself on chips, servers and similar IT infrastructure. On that note, CEO Hock Tan has promised customers that a VMware buy does not mean cutting product lines or raising prices. Rather, he wrote in a recent blog, “we will bring our customers greater flexibility and deliver new solutions to help them connect, scale and protect their IT infrastructure.”

Plus, he said, “the Broadcom business case for this transaction is premised on focusing on the business model, increasing R&D, and executing so that customers see the value of the full portfolio of innovative product offerings, not on increasing prices,” he said.

In a Nov. 4 press release, VMware said joining forces with Broadcom “will offer our combined customers more choice and flexibility to modernize, build, deploy, connect, and protect applications consistently, regardless of where they run: from the data center to any cloud, and to the edge. Meanwhile, VMware’s focus as a standalone company remains unchanged as we continue to help our customers navigate this multicloud world.”

In its latest Converged Systems Tracker, research firm IDC ranks VMware as the No. 1 hyperconverged infrastructure provider based on revenue. The primary product covered in that assessment is vSAN. Nutanix took second in IDC’s evaluation, HPE third, and Dell fourth. VMware, according to IDC, outperformed its peers with a 23.9% year-over-year gain in the second quarter of 2022.