Broadcom has been making big waves in recent times after its acquisition of VMware, they dropped the hammer on VMware customers by discontinuing the perpetual licenses and opting for a subscription-based license model instead.
They also subsequently axed VMware's Partner program in favor of an invite-only system that not many liked, and now we have a new development that will see a crucial part of the VMware business being sold off.
Let's dig in and see what's in store.
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Ankush Das
What's happening: Broadcom has announced that they will be selling off the End-User Computing business (EUC) of VMware for a whopping $4 billion to KKR, a global investment firm based out of the US.
EUC is the part of VMware that deals with customers who use their virtual desktop infrastructure to access enterprise applications and services that are available anywhere securely thanks to the power of the cloud.
It consists of products such as VMware Workspace ONE and VMware Horizon, on which Bradley Brown, the Manager Director for KKR, had this to add:
Workspace ONE and Horizon are best-in-class platforms chosen by many of the world’s leading enterprises to create seamless and secure digital workspaces with interoperability across increasingly complicated technology stacks,
We see great potential to grow the EUC Division by empowering this talented team and investing in product innovation, delivering excellence for customers and building strategic partnerships.
News of this acquisition is not that big of a surprise, as Broadcom CEO, Hock Tan, had revealed back in December 2023 that they intended to “divest the End-User Computing Division”.
Following that, Shankar Iyer, the SVP and GM for the End-User Computing Division at Broadcom had welcomed the move, saying that this would be “a powerful benefit for our customers and an opportunity for our partners”.
Fast-forward to 2024, and we are now seeing it all happen.
Under KKR, VMware's EUC division will be made into a standalone company with money being pumped in to improve R&D and to “pursue new strategic partnerships”.
Does it matter?
Well, It's good to see that Broadcom chose to sell this division rather than entirely scrapping it. But, I am not sure whether there will be any major staff restructuring (read layoffs) after the acquisition is complete.
It is promising to see that the existing management team for EUC, led by Shankar Iyer is being carried over.
But, as we all know, the top brass rarely ever gets the boot, it is the staff lower in the hierarchy that are usually at risk.
Nevertheless, we will have to wait and see how the situation unfolds 🤓
When to Expect: Sometime in 2024, as this acquisition is subject to customary closing conditions and regulatory approvals that will take some time to sort out. For help with that, KKR has employed Evercore, Deutsche Bank Securities, and Jefferies LLC as financial advisors with Simpson Thacher & Bartlett as their legal advisors.
KKR is also aiming to introduce an employee ownership program that will enable non-senior management employees to invest in the new company alongside KKR.
To learn more about this, you can go through the press release.
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