(FT) Shares of software group VMware rose more than 19% in premarket on Monday on reports US chipmaker Broadcom was in talks to acquire it for $50 billion.
The deal happens at a time Broadcom is considering diversifying its offerings from chips to cloud computing services.
VMware has recently attracted buyers with its cutting-edge cloud computing services used by large corporations. Its stock, nevertheless, has been declining, with the company closing at a market cap of $40 billion on Friday, almost half of the 2019 peaks. The stock is also down 20% in the year.
The premium deal by Broadcom is now expected to be a huge plus for Michael Dell, VMware’s largest shareholder. Alongside private equity Silver Lake, Dell acquired VMware in 2016 in a $67 billion deal. Dell owns around 36% of VMware’s outstanding shares.
Broadcom’s deal for VMware amid growing interest for large tech deals despite their valuations getting knocked by inflation fears and economic tightening.
VMW: NYSE is up +19.11% on premarket, AVGO: NASDAQ is down -3.3% on premarket.
