European Regulators Launch Investigation Of Broadcom-VMware Merger

‘We are confident that this deal does not present any competition issues and look forward to working with the European Commission throughout this process,’ Broadcom says in a statement.

The European Commission is now investigating the $61 billion Broadcom-VMware merger, according to the agency’s website, kicking off its initial look at a deal that is also under scrutiny in the U.S.

The regulatory arm of the European Union said it was notified of the deal Tuesday and expects to deliver its initial decision on Dec. 20. The agency did not respond to an email sent to its office by CRN after business hours.

Currently the investigation is in what’s called “phase one.” Many of the deals the agency investigates are approved following that initial inquiry, however the agency can elect to take a more detailed “phase two” look.

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In June, several media outlets reported that the European Commission had decided to do just that, however the agency told CRN at the time that it had not yet been notified of the deal. The commission said it was notified of the deal Tuesday.

In a statement provided to CRN, Broadcom said that it told the commission about the deal, as required by law.

“We are confident that this deal does not present any competition issues and look forward to working with the European Commission throughout this process,” the company wrote. “We continue to make progress with our various regulatory filings around the world and expect the transaction to be completed in Broadcom’s fiscal year 2023. The combination of Broadcom and VMware will give customers choice and greater flexibility to address their most complex IT infrastructure challenges.”

In the U.S. , the Federal Trade Commission informed Broadcom in July that it was engaged in a more rigorous “second request” investigation, which can extend the time it takes to close a deal by weeks or months.

Broadcom has said that it expects the deal to close by Oct. 31, 2023. The last time Broadcom tangled with the European Commission, they settled a case in which regulators accused the company of giving illegal rebates to customers who signed exclusive supply agreements for its semiconductors.

Regulators have derailed the merger plans of other chipmakers, taking down Nvidia’s merger with chipmaker ARM, earlier this year. However experts have questioned whether this merger between Broadcom, a chipmaker, and VMware, a software company, could present a threat to the market.

VMware shareholders voted Nov. 4. to approve the pending merger with Broadcom. With majority shareholder Michael Dell having already pledged his 40-percent ownership stake to voting in favor of the acquisition, the outcome of the vote was heavily weighted towards seeing the deal through.

In all, 352.6 million shares were cast in favor of being acquired by Broadcom — 99.61 percent of the total vote — while 681,000 shares were cast in opposition and 687,000 shares were listed as having abstained.