Broadcom VMware Hold ‘First Integration Planning Meeting’

Broadcom says it has already hosted its first integration planning meeting with VMware in order to ‘hit the ground running’ once it acquires VMware.

Leaders of Broadcom and VMware have already held an integration planning meeting as Broadcom looks to “hit the ground running” following the completion of its planned $61 billion acquisition of VMware.

In a recent letter to all VMware employees by Broadcom CEO Hock Tan and Tom Krause, president of Broadcom’s Software Group, the two executives said the integration planning between the two companies is already underway with more in store in the coming weeks.

“We have a proven track record of successfully integrating the companies that we acquire, providing them with the resources needed to ensure sustainable growth and development as part of Broadcom. In fact, we already held our first integration planning meeting with the VMware management team, and over the coming weeks and months, we will be working closely together to ensure we can hit the ground running once the transaction is completed,” said Tan and Krause in the letter.

Broadcom said the two companies’ shared “engineering-first, innovation-centric cultures” will enable a “seamless transition” once the acquisition is completed, which is expected to occur by January 2023 at the latest.

[Related: Broadcom’s VMware Acquisition: 5 Key Customer And Cost Figures To Know]

Less than two weeks ago, San Jose, Calif.-based Broadcom unveiled its acquisition intent of Palo Alto, Calif.-based VMware for a price tag of $61 billion.

If completed, Broadcom’s software group will rebrand and operate as VMware, which will incorporate Broadcom’s existing infrastructure and security software solutions. In the current agreement, VMware currently has a 40-day “go-shop” provision that allows VMware and its board to actively solicit, receive, evaluate and potentially enter negotiations with parties that offer alternative proposals. The provision expires on July 5, 2022.

Broadcom’s Message To VMware Employees

In their letter to VMware employees, Hock Tan and Tom Krause said VMware aligns “incredibly well” with Broadcom’s strategy.

“In terms of how our values align, we appreciate that VMware’s culture is built on execution, passion, integrity, customers and community. We too share values like these. At Broadcom we prioritize accountability – to our customers, our partners, our shareholders and each other,” said Broadcom’s Tan and Krause.

The executives touted VMware as an “indispensable provider” of mission-critical platform technology with a blue-chip customer base and an “incredible innovation” engine.

“Of course, none of this would be possible without the VMware team, or the strong customer and partner relationships that you’ve built,” said Tan and Krause.

VMware Employees Ask: ‘Why Should I Stay?’

Broadcom told investors last week that it will increase VMware’s profitability by around 80 percent, from $4.5 billion last year to $8.5 billion in the coming years.

As part of its profitability plan, Broadcom plans to “eliminate duplicative administrative functions” across “IT, finance, legal, human resources and facilities,” – indicating that potential layoffs cloud be ahead at VMware.

In a recent VMware town hall meeting with employees, the company’s top executives were asked by VMware employees why should they stay with VMware if Broadcom takes it over.

In response to the question, VMware Chief People Officer Betsy Sutter said, “It’s quite exciting that Broadcom wants to create a software division, a software franchise and I think there’s huge opportunities for us there, obviously. The conversations that I’ve had to date with Broadcom, they are very interested in all things employee. They are very interested in our talent.”

Broadcom has agreed to give “continuing employees” – those who remain after the acquisition – “at least the same wage rate, or base salary,” according to a filing with the U.S. Securities and Exchange Commission. The company will also honor existing language around incentive pay, including cash and equity. Health, welfare and severance benefits that are “no less favorable” than the employee currently has will also be provided.

Hock Tan and Tom Krause told VMware employees in their letter that Broadcom is always searching for ways to drive innovation and improve its product offerings.

“In recent years, we’ve looked to supplement our leadership in semiconductors by growing our presence in infrastructure software,” the executives said. “Together, we will be able to reimagine what we can deliver to our customers.”