CMA approves landmark Broadcom-VMware merger

The UK's stamp of approval comes one week after the European Commission gave the multi-billion dollar deal the thumbs up

The UK's Competition and Markets Authority has approved the Broadcom-VMware merger, regulators announced last night.

The CMA's decision comes one week after the European Commission granted its approval, albeit with several conditions attached, for Broadcom in order for the chip maker to win approval.

The $61bn megamerger, one of the largest in tech history, has now passed regulators in Canada, Brazil, South Africa, the European Union, but still needs approval in the US.

Across the pond, the Federal Trade Commission is more than a year into a deep dive "second request" investigation that began on July 11, 2022.

Last week, the agency told CRN it had no comment, when asked for an update.

Broadcom announced the $61bn acquisition on May 26, 2022.

Since then, authorities around the globe have taken a hard look at whether the combination would hurt Broadcom competitors who rely on VMware's virtualisation of infrastructure to run their business.

The European Commisssion focused on the fiber channel host bus adapter market, and Broadcom competitor Marvell, which it determined could be harmed if it lost access to VMware.

To mitigate this, Broadcom has agreed to several concessions to assure its good behavior.

First it will give Marvell real-time access to VMware updates and developments, it will appoint an independent monitor to ensure good behavior and in the event of a conflict, the company had agreed to a fast-track dispute resolution process.

This is the second monitoring agreement that Broadcom is operating under in Europe. In 2021, authorities there placed Broadcom on seven year probationary period that gives regulators access to its books, after an investigation uncovered ab illegal discount scheme carried out by the chip maker.

The move by the CMA comes two months after a demand letter was sent by regulators asking Broadcom to explain how it could mitigate its effects of the sale.

In its letter yesterday, the UK's CMA disposed of its fears saying its investigation found they were unwarranted, but has left the door open for challenges to the merger until August. 9.

"The competition in markets authority has provisionally found that the anticipated acquisition of VMware by Broadcom may not be expected to result in a substantial lessening of competition in relation to the supply of various server hardware components in the UK," the agency wrote.

VMware's stock price, which for a year were beneath the $142.50 premium Broadcom is offering, have risen dramatically since rumours began to swirl that the merger might pass regulators. Shares hit a 52-week high of $167.37 on Wednesday morning.