UK provisionally approves Broadcom’s $69B VMware acquisition

The U.K.’s competition authority has said that it plans to greenlight Broadcom’s $69 billion bid for virtualization software giant VMware.

The news comes exactly a week after the European Commission (EC) approved the deal, which pretty much leaves the U.S. as the last remaining hurdle for Broadcom, with the Federal Trade Commission (FTC) currently investigating the deal.

Diversify

Broadcom’s interest in buying VMware, which was first announced last May, represents part of its plans to diversify beyond hardware and extend into enterprise infrastructure software. The main concern so far has been that Broadcom could restrict or degrade VMware’s support of Broadcom hardware rivals, which include the likes of Marvell. Thus, the EC last week approved the deal on the condition that Broadcom provides guaranteed access and interoperability between VMware and Broadcom’s competitors.

The U.K.’s Competition and Markets Authority (CMA) has now found that the financial benefit to Broadcom and VMware of restricting access to rivals “would not outweigh the potential financial cost in terms of lost business.” However, unlike the EC which has stipulated that Broadcom must commit to support and interoperability measures for the next 10 years under direct supervision of an appointed trustee, the U.K. is seemingly not going to enforce any such oversight.

“Computer servers — often using the products of Broadcom and VMware — play a critical role in enabling us to work in the office or at home or to access TV shows or use banking services,” noted Richard Feasey, chair of the panel that carried out the investigation said. “That’s why it’s important we investigate this deal to ensure that U.K. businesses continue to benefit from competition and innovation in the supply of server components. After carefully considering a broad range of evidence, we have provisionally found that this deal would not harm competition.”

The big bucks deal, which constitues $61 billion in equity and $8 billion in debt, is set to become one of the biggest tech acquisitions of all time. But it always going to attract regulatory scrutiny, with Europe first revealing plans for an in-depth probe in December with the U.K. follow suit four months later.

Now, barring some last-minute appeals from other interested parties, the deal is one-step closer to getting over the line. The final deadline for responses is on August 9, with a final report expected by September 12.