Rumours swirl of Broadcom talks to buy VMware

Chip maker Broadcom is in talks to acquire VMware following the latter's divestment from Dell Technologies, according to news sources. 

VMware officially became a standalone company in November last year from its parent firm Dell, thereby untying the knot that has held them together since 2016.

However, with both Reuters and Bloomberg cited unnamed "people familiar with the matter", whispers now abound over Broadcom's most recent attempt to diversify itself from its chip-maker heritage.

However, as noted in the reports, “discussions are ongoing and there’s no guarantee it will lead to a deal.”

As it stands, VMware has a market valuation of about US$40 billion. What’s interesting to note is that private equity firm Silver Lake has previously invested in Broadcom and is a current VMware shareholder. 

Broadcom has been attempting to diversify from its chip-maker specialty for some time by buying Symantec’s enterprise security assets in a US$10.7 billion deal in 2019.

Just months later, Accenture bought Symantec’s cyber security services business from Broadcom, but not long before the chip maker axed up to seven per cent of the security vendor's global workforce during its consolidation process of its enterprise security assets. 

In 2018 Broadcom’s surprise bid to buy software company CA for US$18.9 billion wiped off the same amount from its market value as investors and analysts struggled to find a clear reason for the deal at the time. 

At the time the move was widely seen as a way for both companies to work with new partners and expand their respective technologies while keeping close ties to each other.