Shulou(Shulou.com)11/24 Report--

Thanks to CTOnews.com netizen Brother Black fly's left hand clue delivery! On the morning of December 21, Beijing time, it was reported that Broadcom's planned $61 billion acquisition of cloud computing company VMware faces long-term scrutiny by the European Union. Earlier, EU regulators warned that the deal could lead to "higher prices, lower quality and less innovation" for corporate customers.

Margrethe Vestager, the EU's antitrust chief, said in a statement on Tuesday that the preliminary investigation highlighted the risk that Broadcom could prevent its hardware competitors from interoperating with VMware's server virtualization software after the merger. The EU set May 11 as a new deadline to review the deal and said the decision to conduct an in-depth investigation would not prejudge the final outcome of the investigation.

Last month Broadcom formally sought EU approval for the deal after months of preliminary discussions with the European Commission's merger and acquisition team. The deal marks the largest acquisition of a semiconductor manufacturer in history and continues the buying spree of Broadcom CEO Hock Tan, who has built one of the largest and most diversified companies in the industry.

VMware supports Broadcom's software products-a key part of Hock Tan's strategy in recent years. He acquired enterprise software maker CA Technologies in 2018 and Symantec's enterprise security business in 2019.

In addition to EU regulators, the deal is also likely to be reviewed by UK mergers and acquisitions regulators. The agency last month called for comments from interested parties, saying it wanted to know whether the acquisition would significantly reduce competition in the UK market.

Given the size of the deal, the EU's in-depth review is to be expected, according to analyst Jennifer Rie.

"Product overlap should not be a problem," she said earlier this month. "the report shows that the concerns of business groups may be the focus of regulatory review: VMware has a 79 per cent market share in 2021 and the stickiness of its virtual server products may provide the company with pricing leverage for its customers. We believe VMware can provide price assurance to allay these concerns."

Broadcom's plan is the second major technology deal to face intense scrutiny by EU antitrust authorities. Microsoft's planned $69 billion acquisition of game developer Activision Blizzard is under investigation after regulators said they were concerned that the software giant might block franchises such as call of Duty.

"We have made progress on various regulatory documents around the world and have obtained legal merger permits in Brazil, South Africa and Canada," Broadcom said in a statement. "We still expect the deal to be completed in Broadcom's fiscal year 2023."

A series of acquisitions by Broadcom has drawn opposition from competitors who are concerned about Broadcom's expanding business. This led to intense lobbying aimed at preventing further expansion and investigation and fining its product sales strategy.

The biggest setback for Hock Tan came in 2018, when former US President Donald Trump issued an executive order halting his attempt to buy Qualcomm for $117 billion. This marks the end of the company's expansion in the semiconductor industry and led him to build a software business, with the acquisition of VMWare as a step.

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