The business has been making plans to separate from its non-essential divisions, encompassing the end-user computing department as well as Carbon Black, following their purchase of VMware in November for a whopping $69 billion.
Broadcom, a renowned chipmaker, could potentially be seeking to sell its end-user computing operation for around $3.8 billion. This strategy falls within its plans to divest from the non-core sectors of the business subsequent to its acquisition of VMware in November for an extraordinary $69 billion.
As per a report from Reuters, the global investment company KKR has offered a figure of $3.8 billion for the said business, thereby outmatching other private equity contenders.
Back in December, Broadcom announced its intentions to divest from the non-core sectors of its business, such as the end-user computing department and another division known as Carbon Black.
“Our strategy going forward is simply to enable global enterprises to run their applications across their data centers, as well as on public clouds by consuming VMWare’s higher-value software stack,” Hock Tan, president, and CEO at Broadcom, was quoted as saying in an earnings call transcript.
“And to track and keep these workloads across the environment, we are investing in a rich catalog of microservices tools. This will be our focus. And the noncore businesses of end-user computing and Carbon Black will be divested,” Tan added.
When asked specifically about the reasons behind divesting the end-user computing and Carbon Black divisions acquired via the VMware deal, Tan had said that although both were good assets, the company didn’t want to be “distracted” by non-core parts of its business and focus on those divisions where it saw “the biggest value for its business model.”
“We’ll find good homes for them because there are a lot of very interested parties who are more than happy to take those assets. And we’ll be very, very thoughtful about where we put those assets eventually, simply because the customers of many of these two assets, are also the same customers to the VMware Cloud Foundation,” Tan said.
During the same call, chief financial officer Kirsten Spears indicated that both end-user computing and Carbon Black jointly contribute close to $2 billion in revenue on an annual basis.
KKR, on the other hand, has a huge portfolio of investments in the IT sector.
Last year, in October, the company announced the close of its Next Generation Technology Growth Fund III — an approximately $3 billion fund focused on investing in leading growth technology companies across North America, Europe, and Israel.
The investment firm said it has invested over $21.6 billion in related investments since 2014 and built a dedicated global team of more than 35 investment professionals with deep technology growth equity expertise.
The firm has executed several transactions in its tech growth strategy, including DarkTrace, KnowBe4, 09, Onestream, OutSystems, NetSPI, and Restaurant365.
Other notable transactions in the sector include BMC, Ensono, and Contabo.
The end-user computing deal will see Evercore, Deutsche Bank, and Jefferies advising KKR on the transaction, sources told Reuters, adding that Citigroup was advising Broadcom for the deal. UBS Group, Jefferies, and KKR’s capital market unit are reportedly providing debt financing for the deal.
