The UK Competition Authority has said it plans to give the green light to Broadcom’s $69 billion bid for virtualization software giant VMware.
The news comes a week after the European Commission (EC) approved the deal, leaving the U.S. as Broadcom’s last hurdle, with the Federal Trade Commission (FTC) currently investigating the deal.
Broadcom’s interest in buying VMware, first announced last May, represents part of its plans to diversify beyond hardware and enterprise infrastructure software. The main concern so far has been that Broadcom might limit or downgrade VMware’s support for Broadcom’s hardware competitors, which include the likes of Marvell. So the EC approved the deal last week on the condition that Broadcom provides guaranteed access and interoperability between VMware and Broadcom’s competitors.
Similarly, the UK’s Competition and Markets Authority (CMA) has now found that the financial benefit of restricting access to competitors to Broadcom and VMware “does not outweigh the potential financial cost in terms of lost business”.
No supervision
However, unlike the EC, which has stipulated that Broadcom must commit to supporting and operating operations for the next 10 years under the direct supervision of an appointed trustee, the UK is not expressly going to impose such supervision.
“Computer servers – often using Broadcom and VMware products – play an important role in allowing people to work in the office or at home, or access TV programs or use banking services,” noted Richard Facey, chairman of the committee that conducted the investigation. “That is why it is important that we review this deal to ensure that UK companies continue to benefit from competition and innovation in the supply of server components. After careful consideration of a wide range of evidence, we have provisionally found that this settlement will not harm competition.
The massive deal, with $61 billion in equity and $8 billion in debt, is poised to become one of the biggest tech acquisitions of all time. But it will always attract regulatory scrutiny, with Europe first revealing plans for an in-depth investigation in December and the UK following suit four months later.
Now, barring some last-minute appeals from other interested parties, the deal is one step away from going over the border. The deadline for responses is August 9, with a final report expected by September 12.
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