Pat Gelsinger, the former VMware CEO, gave a conditional thumbs up to the company’s potential merger with Broadcom saying he hopes the deal will make it a more “compelling, innovative growth story.”
However, “if it does not, then it’s not good.”
According to several published reports, Broadcom is in talks to buy VMware, the latest in a string of software acquisitions for a company that made its early money in semiconductor chips and hardware. Gelsinger who now helms Intel Corp. was speaking in Davos, Switzerland to Bloomberg TV when he was asked about the deal.
“I’m sort of mixed on the current thinking,” Gelsinger said on Monday. “If it helps VMware be a more compelling, innovative growth story, then it’s good - if it does not, then it’s not good.”
“I put eight years of my life - my soul - into VMware. So, I was a bit startled reading that,” he said.
If a deal were to emerge, it would represent a major step in Broadcom’s goal of expanding beyond its hardware stack roots and becoming a major player in IT infrastructure software - the strategy behind its previous acquisitions of Brocade Communications in 2017, CA Technologies in 2018 and Symantec Enterprise in 2019.
An acquisition of VMware would expand Broadcom’s position in the cloud ecosystem where VMware is heavily engaged.
Broadcom — which has a market cap of US$212 billion — saw its shares lose about 4 percent of their value, dropping to US$522.01 in late afternoon trading Monday. Meanwhile VMware – with a market capitalisation of around US$47 billion – saw its stock price soar 20 percent to US$115 on the news.
The deal would provide Broadcom with one of the largest enterprise software companies in the world as well as new technology to boost its semiconductor business. Broadcom is a global technology conglomerate with a wide range of products—from storage and networking devices to chips and sensors.