Broadcom Inc’s planned $61 billion takeover of cloud-computing company VMware Inc, announced earlier in 2022, now faces an in-depth investigation from European antitrust regulators.
The European Commission has said a preliminary probe indicated the deal may allow Broadcom to restrict competition for the supply of certain components by degrading interoperability between VMware software and competitors' hardware to the benefit of its own hardware.
The deal to buy VMware was announced in May this year, pushing Broadcom deeper into the software world populated by the likes of tech giants International Business Machines Corp. (NYSE:IBM) and Oracle Corporation (NYSE:ORCL).
READ: Broadcom agrees $61 billion takeover of VMware, a big bet that the enterprise software demand boom will continue
It is the second biggest deal of 2022 and would nearly triple the size of Broadcom’s software division and account for nearly 49% of its revenue.
Broadcom had been banking on early EU approval by pointing to competition from Amazon, Microsoft and Google in the cloud computing market, according to people familiar with the matter, reported Reuters in October.
The European Commission now has 90 working days, until May 11 next year to take a decision.
Today, Broadcom reiterated that it continued to expect the transaction would close in its fiscal year 2023, adding it would be continuing to work with the European Commission.
Contact the writer at giles@proactiveinvestors.com