Broadcom in talks to buy VMware

May 22 (Reuters) – Chipmaker Broadcom Inc (AVGO.O) is in talks to buy cloud service provider VMware Inc (VMW.N), people familiar with the matter told Reuters.

Negotiations between Broadcom and VMware are ongoing and an agreement is not imminent, the sources said. The terms of the agreement under discussion could not be learned.

The acquisition will further diversify Broadcom’s business away from semiconductors and into enterprise software, following the $ 18.9 billion acquisition of CA Technologies and the $ 10.7 billion acquisition of Symantec Corp.’s security department over the past four years.

Bloomberg News first reported on the deal late on Sunday. Broadcom and VMware did not immediately respond to Reuters’ requests for comment. At the close of trading on Friday, the market value of VMware was $ 40.3 billion.

Michael Dell is VMware’s largest investor with a 40% stake as a result of Dell Technologies Inc (DELL.N) spinning VMWare out to its shareholders last year, according to Refinitiv data.

The private equity company Silver Lake, which has previously invested in Broadcom, is VMware’s second largest shareholder with a 10% stake, Refinitiv-data shows.

Reporting by Greg Roumeliotis in New York and Shivam Patel in Bengaluru; Edited by Christian Schmollinger, Tom Hogue and Chris Reese

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