FTXL - Broadcom: Acquisition Of VMware Provides 32% Revenue Boost

• In this analysis, we analyzed Broadcom’s planned acquisition of VMware expected to be completed by FY2023.
• We expect the acquisition to enable the company to leverage VMware’s common enterprise customer base and estimated revenue synergies of $1.9 bln and revenue contribution of 32%.
• Moreover, we forecasted VMware’s operating margins to reach 34.1% by 2025 based on its guided EBITDA target of $8.5 bln within 3 years post-acquisition completion.
• In terms of its financial impact, we expect the deal to weigh on Broadcom’s cash flows in FY2023 with an FCF margin of -34.7% and debt to increase by 65% but reduce its WACC to 7.4% post-acquisition.

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