Broadcom, a US-based chipmaker, is expected to receive conditional approval from the European Union (EU) for its $61 billion acquisition of cloud computing firm VMware. This news has caused a surge in the company’s shares by almost 5%.
Conditional Approval with Remedies
According to sources, the EU antitrust clearance for the acquisition will be tied to remedies that relate to Broadcom’s interoperability with its rivals. These remedies are aimed at addressing competition concerns and have not been disclosed. Both Broadcom and the EU antitrust watchdog declined to comment on the matter.
Remedies Targeted at Marvell Technology
One of the remedies focuses on Fibre Channel Host-Bus Adapters (FC HBAs) and is aimed at Broadcom’s rival, Marvell Technology. FC HBAs are storage adapters that allow servers to connect to storage outside the server on a storage-area network using the fiber channel protocol. Broadcom is a leading supplier of FC HBAs.
Other Hurdles for Broadcom
The British competition agency is expected to announce its provisional findings about the deal and possible remedies next month. Companies have become wary of the Competition and Markets Authority (CMA) after it blocked Microsoft’s Activision deal, while the EU cleared it. Furthermore, the US Federal Trade Commission is also investigating Broadcom’s VMware acquisition.
Diversifying into Enterprise Software
Broadcom, which supplies chips used in data centres for networking and specialised chips that speed up AI work, announced the deal last year to diversify into enterprise software. The acquisition of VMware, a cloud computing firm, is the company’s biggest yet.
Broadcom is set to receive conditional approval from the EU for its VMware acquisition, with remedies aimed at addressing competition concerns. The British competition agency and the US Federal Trade Commission are also investigating the deal. Broadcom announced the acquisition last year as part of its efforts to diversify into enterprise software.
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