CMA Approves Broadcom’s $69 Billion VMware Deal, Clearing The Way For One Of The Biggest Tech Deals Ever

This follows the approval of UnitedHealth Group’s £1.24 billion acquisition of EMIS
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Following various high-profile deals being blocked, the Competition and Market’s Authority (CMA) has cleared Broadcom’s $69bn (£54bn) acquisition of VMware, one of the largest tech transactions ever completed. The news comes after the authority also announced its preliminary approval of UnitedHealth Group’s £1.24 bn ($1.58 bn) acquisition of EMIS, a healthcare technology firm. In light of this, Claire Trachet, M&A expert and CEO of business advisory, Trachet, highlights how these approvals could set a precedent for large tech deals to get the green light.

The CMA confirmed its decision after determining that the takeover would not significantly diminish competition in the market for key computer server products. The merger’s approval in the European Union (EU) took place in July, and the Federal Trade Commission‘s (FTC) review period has also ended without any apparent challenges. Broadcom is reportedly actively cooperating with regulators in other jurisdictions and anticipates securing the remaining necessary regulatory approvals by October 30th.

Despite raised concerns that the blocking of deals was hindering the UK’s economic growth, Trachet explains the CMA’s decisions have been vital in preserving competition amongst various sectors, such as tech and AI and have benefitted consumer interests. However, according to DealRoom, while the UK’s tech industry is projected to reach a value of $2.6trillion over the next decade based on its current trajectory, with increased support, research finds the industry could quadruple in value to $4 trillion.

Trachet adds, with countries like the EU and the US also approving high-profile mergers, the UK may be pressured to approve deals in order to not get left behind in the global tech and M&A race. This comes as the CMA remains in discussion around the landmark Microsoft-Activision, which is set to receive a decision on August 29th.

Claire Trachet (CEO/Founder) comments on how these approvals could set a precedent for large tech deals to get the green light and the future of the M&A market for the remainder of 2023:

“While the CMA has made headlines for blocking high-profile deals – including the likes of Microsoft-Activision and Adobe’s acquisition of Figma – the approval of Broadcom’s $69 billion merger signals optimism for larger tech deals seeking the CMA’s approval. By clearing such a significant tech deal, the CMA sets a precedent for future M&A deals within the tech industry as it suggests regulators will be more receptive in allowing large-scale transactions to proceed if they determine that the deal will not substantially harm competition in the relevant markets, helping drive investor confidence. 

“This also proves true with the CMA’s open approach to considering a reshaped deal with Microsoft-Activision, following the green light from the US. With this now casting a spotlight on the UK, it becomes essential for the CMA to carefully consider more collaborative approaches in these deals to ensure a balance between preserving competition and allowing innovation in the sector can thrive. 

“Despite the M&A sector experiencing a slowdown this year, it appears the market is experiencing a rise in the number of deals that are being approved. This comes now as investors are no longer frozen, as they know opportunities are presenting themselves and are ready to actively seize them. They also know that a lot of investment opportunities will come from growing industries like the AI and cybersecurity sectors which are on the rise, as well as struggling companies that will be eagerly looking to exit. 

“In this sense, acquirers know they will be getting a bargain from low valuations, potentially leading to a flurry of M&A deals, presenting a more positive outlook for M&A activity. However, this poses an issue for companies getting less than they bargained for. 

“In addition, there is a growing number of investors who are sat on a dry powder pile having paused investments due to uncertainty in 2022. This means there are significant opportunities on the horizon, and now is the moment to prepare and get deal ready as optionality will increase in H2 of this year.