Chipmaker Broadcom Nearing $3.8 Billion Deal to Sell End-User Computing Unit to KKR
A sign on the campus offices of chipmaker Broadcom is shown in Irvine, California.
Mike Blake | Reuters
Introduction
Leading chipmaker, Broadcom, is on the verge of finalizing a significant deal worth $3.8 billion to divest its end-user computing (EUC) unit. The business, which enables users to access desktops and applications from any device, is set to be acquired by private-equity firm KKR, according to sources familiar with the matter. This move by Broadcom CEO Hock Tan comes as part of the company’s effort to enhance portfolio efficiency following the successful $69 billion takeover of software maker VMware in November.
The Deal and Parties Involved
Broadcom’s end-user computing unit will be sold to private-equity firm KKR in a deal that is estimated to be announced imminently. KKR managed to edge out other leading private equity firms in the competitive auction for the EUC unit, including EQT. As the negotiations continue confidentially, the people sharing this insight requested anonymity. Both KKR and Broadcom, as well as EQT, have refrained from providing immediate comments in this regard. Broadcom had previously expressed its intention to divest the EUC unit back in December, as it concurrently attempts to divest VMware’s security software business, Carbon Black.
KKR’s Track Record and Financial Details
KKR, adorned with a well-known reputation in the sector, has orchestrated numerous influential deals in the past. Notably, in 2018, it acquired U.S. business software company BMC for a noteworthy $8.5 billion, and two years later, it merged BMC with Compuware. Another significant acquisition in 2021 involved private-equity firms Charlesbank Capital Partners and M/C Partners, from whom KKR purchased Ensono, an information services technology provider, for approximately $1.7 billion. The involvement of reputable advisors such as Evercore, Deutsche Bank, Jefferies, and Citigroup, as well as UBS Group, Jefferies, and KKR’s capital market unit providing debt financing, further solidifies the significance and the potential impact of this deal on the market.
Conclusion
In an effort to optimize its portfolio, chipmaker Broadcom is poised to seal a $3.8 billion deal with private-equity firm KKR, divesting its end-user computing unit. Broadcom’s CEO aims to streamline the company’s business lines following the substantial VMware acquisition. This impending deal showcases KKR’s proactive approach in the sector, further consolidating their influential position. With the involvement of renowned advisory firms, the significance of this deal becomes even more apparent, indicating potential notable evolution in the market.
