Broadcom’s creep from semiconductors to software was already quizzical. With the $61 billion purchase of VMware, the fog gets thicker, writes JMAGuilford:
, the fog gets thicker. It doesn’t help that Hock Tan, who runs the $220 billion chipmaker, is being vague about the benefits of this giant deal on which shareholders get no real say.
It’s a big jump compared with where VMware is now. The company made $4.7 billion in EBITDA for its fiscal year 2022, equivalent to around 35% of its revenue. If VMware’s top line continues to grow at the 8% rate analysts currently forecast for the next couple of years, according to Refinitiv, it ought to be on track for about $18.5 billion of revenue four years from now, suggesting more like $6.5 billion of profit.Tan’s target therefore requires some serious work.
Of course, that may be because their opinion doesn’t really matter: Broadcom shareholders don’t get a vote, and VMware’s controlling shareholders, billionaire Michael Dell and private equity firm Silver Lake, have already agreed to the deal. Tan wants investors to share his faith, but it won’t much affect his plans if they don’t.- Semiconductor giant Broadcom on May 26 said that it had agreed to acquire software company VMware in a $61 billion deal.
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