Three senior VMware Inc. executives are leaving the enterprise software company that Broadcom Inc. wants to acquire for $61 billion, VMware’s leader told staff in a memo on Monday.
VMware Chief Executive Raghu Raghuram said the senior vice presidents of cloud infrastructure, Mark Lohmeyer; applications and management business, Ajay Patel; and networking and advanced security, Tom Gillis, are leaving, according to the memo, which was viewed by The Wall Street Journal.
Broadcom in May said it planned to buy VMware as part of a wider push by the chip company into software. VMware would nearly triple the size of Broadcom’s software division and account for nearly 49% of the company’s revenue. The deal is still awaiting regulatory approval.
“As it happens during such transition, we find some executives decide to move on,” according to the internal memo. “All three have held leadership positions over several years and drove much impact across the business.”
BROADCOM BUYING VMWARE FOR $61B
A VMware spokeswoman confirmed the departures and said the company had named four executives to replace them.
The U.S.’s Federal Trade Commission has been seeking information from the companies about the combination, according to a previous regulatory filing.
Broadcom is expecting an extended period of reviews of the deal in many jurisdictions across the globe, Chief Executive Hock Tan said in a call with analysts last week, even though it had already received clearance in three countries—Brazil, Canada and South Africa. He said he still expected it to be completed in the company’s 2023 fiscal year, which runs through next October.
Broadcom, with an extensive record of acquisitions, is no stranger to scrutiny of its deals, including on national-security grounds. The company, which was based in Singapore before relocating to the U.S. in 2018, had its $117 billion hostile bid for mobile-phone chip maker Qualcomm Inc. halted by former President Donald Trump over concerns about the implications for the U.S.’s technological face-off with China.
Mr. Tan has a history of finding companies with deep links into large corporations’ information-technology setups that would be difficult for them to abandon. The company then cuts costs and gets the most out of their products by “cross-selling and upselling” them, as Broadcom’s head of software, Tom Krause, described the strategy in November of last year.
THOMA BRAVO TO TAKE COUPA SOFTWARE PRIVATE IN $8B DEAL
VMware signaled the departures aren’t expected to affect its operations. The memo pointed to the company’s strong and seasoned set of senior executives who are ready to step into the roles as well as broader efforts to reorient its business. VMware is “preparing to enter the next phase of growth and evolution as a division of Broadcom during 2023,” Mr. Raghuram wrote.
Broadcom shares were up 2.2% in Monday trading, with VMware’s stock climbed 1.4%.
Regulators in Washington have taken an increasingly hard line on tech mergers. The FTC last week sued Microsoft Corp. over its planned purchase of videogame maker Activision Blizzard Inc. Chip supplier Nvidia Corp. in February called off its deal to buy British chip-design specialist Arm amid regulatory concerns. The FTC on Thursday also asked a judge to halt Meta Platforms Inc.’s planned acquisition of a virtual-reality startup.
|ACTIVISION BLIZZARD INC.
|META PLATFORMS INC.
CLICK HERE TO GET THE FOX BUSINESS APP
Broadcom has said it is paying in half cash and half stock and would assume $8 billion of VMware’s debt. The deal, if completed, would be one of the tech industry’s largest ever. Broadcom would owe a termination fee of $1.5 billion if the deal falls apart.
Asa Fitch contributed to this article.
Read the full article here