The regulator has set itself a deadline of 22 March 2023 on whether to refer the deal for a phase 2 probe or not
UK CMA begins formal investigation into Broadcom, VMware’s $61bn deal. (Credit: Coolcaesar/Wikipedia.org)
The UK Competition and Markets Authority (CMA) has launched a phase 1 investigation into the previously announced American semiconductor manufacturer Broadcom’s $61bn acquisition of cloud computing and virtualisation technology company VMware.
In November 2022, the British competition watchdog planned to launch an investigation into the proposed merger.
At that time, the regulator said that it is considering whether the deal would lead to a significant reduction in competition within any market or markets in the UK for services or goods.
For helping with the assessment, the CMA sought comments on the proposed acquisition from any interested parties, which was closed on 6 December 2022.
The regulator has set itself a deadline of 22 March 2023 on whether to refer the deal for a phase 2 probe or not.
In a statement, the competition authority said: “The Competition and Markets Authority (CMA) hereby gives notice pursuant to section 96(2A) of the Act that the merger notice provided by Broadcom Inc. in relation to the anticipated acquisition by Broadcom Inc. of VMware, Inc. (the Merger) meets the requirements of section 96(2) of the Act.”
The cash-and-stock deal between Broadcom and VMware was announced in May 2022. As per the terms of the transaction, the shareholders of the publicly-listed VMware will choose to accept $142.5 in cash or 0.252 shares of Broadcom shares for each of the VMware shares they hold.
Following the completion of the proposed deal, the current Broadcom shareholders are assumed to own a stake of about 88% in the combined company, while existing VMware shareholders will hold the remaining stake of about 12%.
VMware offers multi-cloud services for apps which include cloud infrastructure, application modernisation, cloud management, security, and networking in addition to its Anywhere Workspaces solution.
In December 2022, the European Commission (EC) launched an in-depth phase 2 investigation into the same deal.
The Commission raised concerns that the proposed deal could enable Broadcom to stifle competition in the market for certain hardware components that interoperate with the software of VMware.