UK Watchdog Opens Investigation Of $61bn Broadcom-VMware Buy

The UK’s competition regulator, the Competition and Markets Authority (CMA), announced on Wednesday the launch of a Phase 1 merger inquiry of Broadcom’s proposed $61 billion (£51bn) acquisition of VMware.

That acquisition had been announced in May 2022, and was the second-largest tech acquisition after Microsoft’s $68.7bn potential purchase of Activision Blizzard, which also remains under investigation by regulators.

In July 2022 the US Federal Trade Commission (FTC) said it would undertake a more in-depth “second look” investigation of the Broadcom-VMware deal, in line with a policy announced in September 2021.

CMA probe

Large tech deals have been attracting close regulatory scrutiny amidst concerns of excessive market power being concentrated in the hands of a few players.

In November 2022 the CMA announced it was following the European Union in launching an initial review of the Broadcom deal to buy VMware, over concerns the deal could substantially hurt competition in the UK.

Now this week the CMA announced that it has now begun a Phase 1 investigation of the deal.

It added that it has until 22 March before it needs to make a decision over whether to refer the merger for a Phase 2 investigation.

Acquisition spree

US chip maker Broadcom in recent years has pursued an aggressive acquisition strategy, as it seeks to transform (via acquisitions) into a diversified technology company – with holdings ranging from microprocessors to cloud infrastructure software.

In 2016 for example Broadcom acquired fibre channel and storage area networking firm Brocade for $5.5 billion (£4.5bn).

Then in November 2017 Broadcom made an unsolicited $130 billion offer to acquire Qualcomm, but it lowered its takeover offer to $117bn, after Qualcomm raised its own bid for Dutch chip maker NXP Semiconductors NV to $44bn.

Broadcom’s attempted acquisition of Qualcomm was then blocked by the US Trump administration on national security grounds later in 2018.

But Broadcom did not take that setback lying down, and in 2018 it acquired IT veteran CA Technologies for $18.9 billion.

Then in 2019 Broadcom acquired Symantec’s security division for $10.7bn – although it quickly sold off the Symantec unit to Accenture in early 2020.