Report: Broadcom to Sell VMware's Remote Access Computing Business to KKR in $3.8B Deal
Chipmaker Broadcom Inc. is reportedly looking to offload VMware Inc.'s End User Compute business to private equity firm KKR & Co Inc. in a deal worth $3.8 billion.
Broadcom to Sell VMware's End User Compute Business to KKR
Broadcom is planning to sell VMware's End User Compute (EUC) business to private equity firm KKR in a deal worth $3.8 billion, according to reports. The proposed deal is part of Broadcom CEO Hock Tan's efforts to streamline the company's operations after acquiring VMware for $69 billion in November. KKR emerged as the winner in an auction involving several other private equity firms.
VMware's EUC business specializes in selling software that allows users to access desktops and applications remotely through the cloud. The potential deal with KKR is expected to be announced soon.
KKR already owns a company called Alludo, which sells virtualization software. The acquisition of VMware's EUC business could complement KKR's existing portfolio and expand its offerings in the remote access computing market.
Broadcom's Streamlining Efforts for VMware
After acquiring VMware, Broadcom has been focused on streamlining the company to maximize profitability. In November, Broadcom announced its goal to double VMware's earnings before interest, taxes, depreciation, and amortization to $8.5 billion within the next three years.
Following the acquisition, Broadcom restructured VMware into four divisions responsible for different product subsets. The company also announced layoffs of over 1,800 employees in December as part of its profitability plan.
Broadcom plans to relocate its headquarters from San Jose to VMware's head office in Palo Alto. Additionally, there are reports that Broadcom is considering divesting VMware's end-user computing unit and selling off its Carbon Black cybersecurity business.
KKR's Strategy and Potential Benefits
KKR has been actively involved in the technology industry, making several notable acquisitions. The firm's investment strategy focuses on acquiring veteran and legacy businesses that deliver consistent profits with lower risks.
The potential acquisition of VMware's EUC business aligns with KKR's strategy. The demand for remote access and virtualization software is expected to grow, making it an attractive investment opportunity. Additionally, the cash received from the deal could help Broadcom settle some of its debts incurred from the VMware acquisition.
VMware's traditional virtualization customers are not expected to be affected by the deal. However, EUC customers will need to ensure that the new owner upholds pricing and licensing commitments.
