KKR to acquire VMware's end user computing biz from Broadcom for $4B

We’ve already started to see big M&A, as in multibillion-dollar deals, finally pick up this year after a slow period last year. Today, KKR added to that growing total when it announced it was going to acquire Broadcom’s end user computing business for $4 billion.

These pieces include VMware Workspace One and VMware Horizon, two remote desktop applications that had been part of the VMware family of products. You may recall that Broadcom spent $61 billion to buy VMware last year and has been looking to recoup some of the high price tag ever since.

The deal was originally announced in May 2022, and it took until November 2023 to clear all the regulatory hurdles and close the deal. Almost immediately, Broadcom began slashing costs, starting with laying off over 2,000 VMware employees, just a week after the deal was official.

The company then took the axe to 56 products a month later, as the cost-cutting measures continued. As the company looks for other ways to recover some of the high cost of buying VMware, it is perhaps logical to be selling off the end user computing pieces announced today, as it seems the company is concentrating on core capabilities and getting rid of anything that doesn’t fit into its more narrow definition of what the company will look like moving forward.

During the early days of the pandemic when offices were forced to shut down, and employees needed to work remotely, having remote desktop tooling like Workspace One and Horizon gave IT more control over the remote environment, but KKR managing director Bradley Brown still sees a lot of room for growth moving forward to build out the EUC (end user computing) division into a vibrant stand-alone business.

“The pandemic certainly drove growth in 2020 and 2021 as companies had to accelerate their focus on enabling efficient remote work and work from anywhere, but we believe these requirements are going to remain part of model for work going forward — there are more mobile devices, software layers, dynamic office environments and home work setups. Managing complexity is here to stay,” Brown told TechCrunch.

He also sees a security and management component to this kind of computing regardless of where employees end up working. "Historically, workspace connectivity was about how people wanted to work, but today and in the future it’s increasingly about security and compliance. IT environments are getting exponentially more complex but the size of corporate IT teams isn’t growing at the same rate," he said. He believes tools like the ones his company is purchasing will help do more with less by making it easy to secure and manage these kinds of environments.

One interesting aspect of this deal is that KKR intends to implement an employee ownership program, giving employees a chance to own equity in the new company alongside KKR. The deal is expected to close sometime later this year, subject to standard regulatory approval, of course.

Today's deal marks the fifth multibillion-dollar deal of the year, joining, among others, HPE buying Juniper Networks for $14 billion and Synopsys acquiring Ansys for $35 billion. Both of those deals were announced last month.