Investment firm KKR has reached a definitive agreement to acquire Broadcom's End-User Computing Division (EUC Division) for roughly $4 billion. The transaction will transform the EUC Division into an independent entity.
Previously part of VMware before Broadcom's acquisition, the EUC Division specialises in digital workspace technologies. It offers Horizon, a virtual desktop and application platform, and Workspace ONE, a Unified Endpoint Management platform, among other services designed to manage and deliver applications across various devices.
Bradley Brown, Managing Director, KKR, sees this acquisition as an opportunity to foster growth within the EUC Division by focusing on product innovation and strategic partnerships. “Workspace ONE and Horizon are best-in-class platforms chosen by many of the world's leading enterprises to create seamless and secure digital workspaces,” Brown stated, highlighting the potential for expansion and enhanced service delivery.
“We are confident that this pending transaction marks an exciting next chapter for the EUC Division,” Shankar Iyer, Senior Vice President and General Manager of the EUC Division at Broadcom, said.
KKR said it intends to invest in the EUC Division's R&D and explore new strategic partnerships, with a significant emphasis on customer and partner relationships. The firm also plans to introduce an employee ownership program aimed at improving employee engagement and building ownership culture for business success.
The investment is made through KKR's North America Fund XIII, and the closure of the transaction is anticipated in 2024, pending regulatory approvals.
Broadcom shedding non-core assets of VMware
Broadcom's decision to sell VMware's End-User Computing (EUC) Division to KKR stems from a strategic refocusing on VMware's core business areas, particularly those aimed at creating private and hybrid cloud environments for large enterprises globally.
The move is part of Broadcom's broader strategy to streamline VMware's operations towards its high-value software stack, facilitating enterprises' ability to run applications across datacenters and public clouds.
The divestiture of the EUC and Carbon Black units is seen as a step to shed non-core assets, allowing for a more focused investment and development in areas deemed strategic to VMware's future growth and alignment with Broadcom's long-term goals.
The sale raises several implications for the industry, particularly around product support, and integration challenges. It may also force organisations to reassess their dependency on VMware's solutions.
This divestiture aligns with Broadcom CEO Hock Tan‘s vision to focus on core areas of VMware's business, optimising for Cloud Foundation sales which encompass compute, storage, network virtualisation, multi-cloud management, and automation.
This shift to selling bundled products rather than individual components is expected to contribute significantly to achieving Broadcom's financial objectives, including a targeted addition of $8.5 billion of pro forma EBITDA within three years of the deal's closing.
