The Broadcom acquisition machine keeps on rolling
Broadcom and its shrewd CEO Hock Tan certainly have themselves a reputation for proficiency in the field of M&A.
Look no further than the chipmaker’s latest groundbreaking acquisition, an eye-watering US$69 billion deal to buy cloud computing firm VMware.
Broadcom itself was the product of a big-money takeover when Avago, with Tan at the helm, purchased Broadcom Corporation for US$37bn and decided to rebrand by adopting its name.
In fact, it’s fair to say Tan has built his career on making similarly smart business decisions and bold acquisitions.
Dawn of a new era for Broadcom
Announcing Broadcom’s latest acquisition, Tan said the deal represented the dawn of a “new and exciting era”.
The company has outlined its intention to invest significantly in the advancement of VMware’s innovation and customer value, with half of this investment in R&D and the other half helping to accelerate the deployment of solutions through VMware and partner professional services.
Tan added: “VMware joins our engineering-first, innovation-centric team, which is another important step forward in building the world’s leading infrastructure technology company.
“While an important moment for Broadcom, it’s also an exciting milestone for our customers around the world. As I said when we first announced the acquisition, we now have the scale to help global enterprises address their complex IT infrastructure challenges by enabling private and hybrid cloud environments, and helping them deploy an ‘apps anywhere’ strategy.
“Our goal is to help customers optimise their private, hybrid and multi-cloud environments, allowing them to run applications and services anywhere.”
M&A crucial to Broadcom’s success
Mergers and acquisitions have been crucial to the success of Broadcom, which has a long track record of investing heavily in the businesses it acquires to drive sustainable growth and customer value.
With Tan at the helm, Avago grew rapidly during the 2010s through the acquisitions of semiconductor designer LSI and the tech giant Brocade, before the game-changing takeover of Broadcom in 2015.
This bold strategy hit the headlines in 2017 when Broadcom launched an unsolicited US$103bn bid to buy rival firm Qualcomm.
But, in what was an unprecedented move, the then-President Donald Trump blocked the mega-merger on the grounds of national security, despite Broadcom agreeing months earlier to relocate its headquarters from Singapore to the US.
Not to be deterred, Broadcom has stuck to its tried and trusted approach, and ultimately gained approval from regulators around the world for its deal to buy VMware.
Speaking to the Financial Times earlier this year, Tan pledged further acquisitions in the near future, while revealing he would stay on as CEO for at least another five years.
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