Broadcom’s proposed $61bn takeover of VMware will be subject to an investigation by the UK Competition and Market Authority (CMA) the regulator revealed today. It is the latest investigation to be launched into the deal, which was announced earlier this year.
The CMA is inviting interested parties to comment on the deal over the next two weeks as part of a ‘Phase One’ investigation under the 2002 Enterprise Act, which closes on December 6. Once this is complete, the competition watchdog will assess whether to progress to a fuller ‘Phase Two’ investigation. It is here that the CMA could decide to take action if the deal is found to be anti-competitive, including blocking it altogether.
Chipmaker Broadcom’s plan to buy VMware, which specialises in virtualisation software, was first revealed in May. The companies are not a natural fit, and analysts told Tech Monitor at the time that the move by Broadcom was a bid to diversify its portfolio.
VMware has been operating as an independent company since it split from Dell last year, and an alliance with Broadcom, which has successfully undertaken large acquisitions in the past, could give it more financial power. It is also aiming to accelerate its transition away from providing on-premise solutions to offering software-as-a-service solutions to clients.
However, the size of the deal means regulators are queueing up to investigate its impact on the market, particularly as VMware clients are said to have voiced concern that they may be forced to buy Broadcom products after the takeover.