In a strategic move aimed at streamlining its portfolio, chipmaker Broadcom is on the brink of finalizing a monumental $3.8 billion deal to divest its remote access unit to private equity giant KKR, sources familiar with the matter revealed on Saturday.
This potential transaction underscores Broadcom CEO Hock Tan’s commitment to optimizing the company’s assets following the completion of its landmark $69 billion acquisition of software heavyweight VMware in November.
According to insiders, KKR emerged victorious in a competitive auction for Broadcom’s end-user computing (EUC) unit, outbidding rival private equity firms such as EQT.
While the deal’s official announcement is anticipated as early as Monday, sources cautioned that details remain confidential, with anonymity requested.
Both KKR and Broadcom declined to comment on the matter, while EQT did not provide an immediate response to inquiries.
Broadcom had previously signaled its intention to divest the end-user computing unit in December, as part of a broader strategic realignment. Concurrently, the company is actively exploring options to offload VMware’s security software business, Carbon Black.
KKR’s entry into this agreement underscores its extensive experience in strategic deal-making within the technology sector. Notably, the private equity giant orchestrated the $8.5 billion acquisition of U.S. business software company BMC in 2018, followed by the merger of BMC with Compuware two years later. Additionally, in 2021, KKR successfully acquired information services technology provider Ensono for approximately $1.7 billion.
The transaction is being facilitated with advisory support from Evercore, Deutsche Bank, and Jefferies for KKR, while Citigroup is advising Broadcom. UBS Group, Jefferies, and KKR’s capital market unit are reported to be providing debt financing for the deal.
As Broadcom edges closer to finalizing this landmark transaction, industry observers anticipate that the strategic divestiture will not only optimize the company’s operational focus but also unlock substantial value for stakeholders. With KKR’s proven track record of strategic investments in the technology space, the deal holds the promise of unlocking new avenues for growth and innovation in the evolving landscape of remote access and end-user computing.