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This comes just a week after the EU said it would allow Broadcom’s acquisition of VMware to go through if it complies with interoperability commitments.
Broadcom’s planned acquisition of VMware has been given a provisional nod in the UK. The Competition Markets Authority (CMA) found the deal, which comprises $61bn in equity and an assumption of $8bn in debt, would not weaken competition in the supply of critical computer server products.
Announced today (19 July), the decision comes just a week after Broadcom got a conditional approval from the EU on the condition the US hardware giant complies with interoperability commitments.
First announced more than a year ago, the acquisition of VMware faced regulatory scrutiny in the UK in January of this year. This led to an in-depth investigation kicking off in March that would address competition concerns.
Specifically, the CMA was worried that Broadcom could restrict competition in the market for certain hardware components that interoperate with VMware’s software.
If approved, the mammoth acquisition deal would see the Broadcom Software Group rebrand and operate as VMware, incorporating Broadcom’s infrastructure and security software as part of an expanded VMware portfolio.
Richard Feasey, chair of the independent inquiry panel carrying out the CMA investigation, said that computer servers, which often use Broadcom and VMware products, play a “critical role” in enabling people to work, access TV shows or use banking services.
“That’s why it’s important we investigate this deal to ensure that UK businesses continue to benefit from competition and innovation in the supply of server components,” Feasey said. “After carefully considering a broad range of evidence, we have provisionally found that this deal would not harm competition.”
The CMA said it provisionally found that the potential financial benefit to Broadcom and VMware of making rival products work less well with VMware’s software “would not outweigh the potential financial cost in terms of lost business”.
“The panel found the deal would be unlikely to harm innovation, in particular since information about new product adaptations only needs to be shared with VMware at a stage when it is too late to be of commercial benefit to Broadcom,” a CMA statement reads.
With the UK and EU now ready to allow the acquisition to go ahead, Broadcom is waiting to hear from regulatory authorities in the US before finalising the deal with VMware, which was one of the largest announcements in the tech sector last year.
Broadcom previously made a $103bn takeover bid for Qualcomm, but that deal was blocked by then US president Donald Trump in 2018 because of national security concerns.
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