Broadcom Victory In Europe As VMware Deal Gets Green Light From EU Regulators
To win approval, Broadcom agreed to a 10-year deal with the European Union that gives Marvell and any competitors that emerge guaranteed access to Broadcom’s source code around its Fiber Channel Host-Bus Adapters.
The $61 billion tie-up between Broadcom and VMware was approved by the European Commission Wednesday, clearing the way for one of the largest tech mergers of all time that promises to reshape both companies involved.
“We welcome the European Commission’s decision to clear Broadcom’s acquisition of VMware, subject to conditions,” Broadcom said in a statement it attributed to a spokesperson. “With this decision, the Commission recognizes the importance of this combination in enabling enterprises to accelerate innovation and expand choice by addressing their most complex technology challenges in this multi-cloud era.”
While a VMware spokesperson said the company was “pleased” the deal was allowed to move forward, many VMware channel partners have been on the fence about the deal since it was announced, partially owing to Broadcom’s poor channel record following its Symantec and CA acquisitions. This time, Broadcom vowed to “embrace the channel” and it has promised not to raise prices on VMware.
One VMware partner said this morning it remains skeptical that the deal will be a win for the channel.
“Our team and our customers will be monitoring the situation very closely … wanting to understand how the acquiring company will continue to invest in and grow the VMware platform and capabilities,” the partner told CRN. “We don’t expect any major changes for customers in the near term, though we think there may be a possibility that a Broadcom-VMware refocuses its efforts on core products over time.”
Wall Street, meanwhile, rejoiced at rumors of the news Tuesday, sending VMware stock 5 percent higher to close at $151.53, with mid-day trading pushing shares to a 52-week high. This is the first time VMware stock has closed above $150 since October 2021.
The European Commission approved the merger after spending seven months involved in a deep-dive probe that found Broadcom could “foreclose” its only rival for Fibre Channel Host-Bus Adapters (FC HBAs), chipmaker Marvell, had the deal been allowed to proceed.
“The commitments offered by Broadcom will enable its only rival, Marvell, to continue competing on equal footing and ensure a similar protection for any future entrants,” Margrethe Vestager, executive vice president in charge of competition policy for the European Commission, wrote in announcing the decision.
Broadcom agreed to give competitors access to the source code for all of its current and future FC HBA drivers.
In addition, it will give rivals access to interoperability APIs necessary for the competition to develop and certify third-party FC HBAs. It has promised to keep that working for rivals and to give them the same real-time access to information for 10 years.
The agreement also will be monitored by an independed trustee and come with a fast-track dispute resolution process.
“This will allow Marvell and any potential entrant to ensure interoperability with VMware’s server virtualization software and allow them to reuse and modify Broadcom’s drivers for its own use,” the commission wrote. “Furthermore, Broadcom committed to implementing an organizational separation between the team working on Broadcom’s FC HBAs and the team in charge of third-party certification and technical support. It also committed to ensuring protection of confidential information of Marvell and any potential entrant obtained in the context of the interoperability and certification processes.”