Key Points:
- U.S. Chipmaker Broadcom is nearing a $3.8 billion deal to sell its end-user computing business to private equity firm KKR.
- This move aligns with Broadcom’s strategy to streamline its portfolio following the acquisition of VMware.
- KKR emerged as the winning bidder in the auction for Broadcom’s EUC unit, surpassing other private equity firms.
- KKR’s involvement underscores its significant presence in the technology sector, with previous acquisitions including BMC and Ensono.
Chipmaker Broadcom is on the brink of finalizing a $3.8 billion deal to offload its end-user computing (EUC) business to private equity firm KKR. This potential transaction comes as Broadcom’s CEO, Hock Tan, aims to streamline its portfolio following its recent $69 billion acquisition of software maker VMware.
KKR emerged victorious in the auction for Broadcom’s EUC unit, outbidding other private equity firms, including EQT. The deal is anticipated to be officially announced as early as Monday, with individuals familiar with the matter speaking on condition of anonymity due to the confidential nature of the discussions.
While KKR declined to comment on the matter, neither Broadcom nor EQT immediately responded to requests for comment. Broadcom announced its intention to divest its end-user computing unit in December as part of its strategic efforts to focus on core businesses. Additionally, the company seeks to divest VMware’s security software business, Carbon Black.
KKR’s involvement in this potential deal underscores its significant presence in the technological sector. In recent years, KKR has executed several notable transactions, including acquiring U.S. business software company BMC for $8.5 billion in 2018. Furthermore, KKR combined BMC with Compuware, which it acquired from buyout firm Thoma Bravo, demonstrating its strategic consolidation efforts.
In 2021, KKR expanded its portfolio by acquiring information services technology provider Ensono from private equity firms Charlesbank Capital Partners and M/C Partners for approximately $1.7 billion. Now, with the potential acquisition of Broadcom’s EUC unit, KKR continues to bolster its position in the technology market.
The transaction is facilitated with advisory support from Evercore, Deutsche Bank, and Jefferies for KKR, while Citigroup advises Broadcom. UBS Group, Jefferies, and KKR’s capital market unit are providing debt financing for the deal, highlighting the collaborative efforts involved in executing this significant acquisition.
