Broadcom trying to acquire VMware for $61 billion #makerbusiness
Broadcom has been trying to buy a bunch of companies over the years, mostly to work their way into established markets. A recent article in the Wall Street Journal outlines their latest acquisition attempt, which would be a gargantuan deal at $61 billion.
Mr. Tan built Broadcom into a microchip powerhouse by acquiring makers of a host of unsexy-but-essential components, then cutting costs and leveraging the company’s growing pricing power. He is now banking that the same model will work in corporate software.
The buy would nearly triple the size of Broadcom’s software division and account for nearly 49% of the company’s revenue.
The strategy, according to Broadcom’s head of software Tom Krause is:
…find companies with deep links into large corporations’ information-technology setups that would be difficult for them to abandon. Then cut costs and get the most out of their products by “cross-selling and up-selling” them..
Of course this isn’t a done deal. In 2018 the Qualcomm bid was blocked by the Trump administration. Similar barriers exist here.
The U.S.’s Federal Trade Commission could sue to block the deal, potentially making the case that Broadcom could use its dominance to force customers to buy its other products or pay higher prices, said Christopher Sagers, a law professor and antitrust expert at Cleveland State University.
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