European Commission probing Broadcom's $61bn VMware deal

The US semiconductor company feels ‘confident’ the deal will be cleared

The European Commission is investigating the $61bn Broadcom-VMware merger, according to the agency's website, kicking off its initial look at a deal that is also under scrutiny in the US.

The regulatory arm of the European Union said it was notified of the deal on Tuesday and expects to deliver its initial decision by December 20.

CRN has contacted the agency for comment.

The investigation is currently in its first phase. Many of the deals the agency investigates are approved following that initial inquiry, however it can elect to take a more detailed ‘phase two' look.

In June, it was reported that the European Commission had decided to do just that, however the agency told CRN at the time that it had not yet been notified of the deal.

In a statement provided to CRN, Broadcom said it had told the commission about the deal, as required by law.

"We are confident that this deal does not present any competition issues and look forward to working with the European Commission throughout this process," Broadcom said in a statement.

"We continue to make progress with our various regulatory filings around the world and expect the transaction to be completed in Broadcom's fiscal year 2023.

"The combination of Broadcom and VMware will give customers choice and greater flexibility to address their most complex IT infrastructure challenges."

In the US, the Federal Trade Commission informed Broadcom in July that it was engaged in a more rigorous "second request" investigation, which can extend the time it takes to close a deal by weeks or months.

Broadcom said it expects the deal to complete by October 31, 2023.

Semiconductor takeover fails

The last time Broadcom tangled with the European Commission, they settled a case in which regulators accused the US company of giving illegal rebates to customers who signed exclusive supply agreements for its semiconductors.

Regulators have derailed the merger plans of other chipmakers, taking down Nvidia's merger with chipmaker ARM, earlier this year.

However experts have questioned whether this merger between Broadcom, a chipmaker, and VMware, a software company, could present a threat to the market.

Earlier this month VMware shareholders voted to approve the pending merger.

With majority shareholder Michael Dell having already pledged his 40 per cent ownership stake to voting in favour of the acquisition, the outcome of the vote was heavily weighted towards seeing the deal through.

In all, 352.6 million shares were cast on the side of being acquired by Broadcom — 99.61 per cent of the total vote — while 681,000 shares were cast in opposition and 687,000 shares were listed as having abstained.