We can see that after a stagnant period last year, the technology industry is finally picking up pace with a string of multi-billion deals. KKR, a leading global investment firm, has added to the growing total by announcing its acquisition of Broadcom’s end user computing business for a whopping $4 billion.
This includes the popular VMware Workspace One and VMware Horizon applications, which were previously part of the VMware product family. Let’s not forget that Broadcom had spent a staggering $61 billion to acquire VMware last year and has been looking to recoup some of the high price tag ever since.
The deal was first announced in May 2022, but it was only in November 2023 that all the regulatory hurdles were cleared and the deal was finalized. However, the celebration was short-lived as Broadcom quickly began implementing cost-cutting measures. This included laying off over 2000 VMware employees just a week after the deal was official. And a month later, they axed 56 products in a bid to reduce expenses. It seems that the company’s focus is now on core capabilities and it is getting rid of anything that doesn’t align with its vision for the future.
During the early days of the pandemic when offices were forced to shut down, remote desktop tools like Workspace One and Horizon became essential for businesses to facilitate remote work. These tools gave IT departments better control over the remote work environment. KKR managing director, Bradley Brown, is optimistic about the potential for growth in the EUC (end user computing) division. He believes that by empowering the talented team and investing in product innovation, the division can become a thriving standalone business. Brown stated, “We see great potential to grow the EUC Division by empowering this talented team and investing in product innovation, delivering excellence for customers and building strategic partnerships.”
One interesting aspect of this deal is that KKR plans to introduce an employee ownership program, giving employees a chance to own equity in the new company alongside KKR. The deal is expected to close later this year, subject to standard regulatory approval, of course.
Today’s announcement marks the fifth large-scale deal of the year, joining the likes of HPE’s acquisition of Juniper Networks for $14 billion and Synopsys purchasing Ansys for $35 billion. Both of these deals were announced just last month, further solidifying the current trend of high-priced mergers and acquisitions in the industry.
