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Chipmaker Broadcom to buy VMware in massive $61 billion deal

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Yahoo Finance Live anchors discuss the Broadcom-VMware deal.

Video Transcript

- All right, let's move on to another thing to watch. Broadcom officially announcing it's going to buy software company VMware. It's a cash and stock transaction. It values VMware at $61 billion. It's also going to assume $8 billion of VMware's debt. All of that means this is one of the biggest technology acquisitions ever, with that $61 billion price tag here.

And if you look at how those VMware shares are trading this morning, we are seeing a lift. This was something that was reported on earlier in the week. So we're not seeing the huge kind of gap up that you would expect because it already had that move upward here.

- They bought the rumor.

- Exactly. As you pointed out to me earlier, to remind folks, the Broadcom ticker is AVGO.

- Yeah. It's a head scratcher. I had to look that up a few years ago because I'd forgotten. Avago was a company. They acquired Broadcom in 2015. That was their ticker. And they kept it.

At the time, that was the biggest tech deal ever. It was about 30-something billion dollars, and just, I guess, coming full circle here, another huge transaction. I think the biggest all time was Dell and what was it?

- EMC.

- EMC. Yeah, that was about $67 billion. But huge deal here. And it's going to shake things up for some of the other suppliers in the industry.

- Yeah. I mean, there have been some big tech deals this year, even though we've seen deal making and IPO making slow down a little bit. But Microsoft Activision, for example. And we've seen some other big tech deals.

- Yeah. And the goal is just to smooth out their revenue stream because chip making is very cyclical. So if you can add something as a service, and in this case, it's software, just kind of smooths things out.

- Yes. That's the idea, at least. So we'll see how that works out. One more note about that, by the way. Remember, we talked about Michael Dell, him being the biggest shareholder of VMware. So apparently, he is on board for this deal, as he would need to be.

- He was smiling at Davos. That's what our Editor In Chief, Andy Serwer, said. He couldn't talk, but he had a big grin.

- I'm sure he did. This deal, by the way, includes a go shop provision. So VMware can solicit competing offers. That was the concession that Michael Dell and Silver Lake, which is one of the other big owners, won as part of this deal.