Broadcom sells VMware end-user computing unit to KKR for $4 billion

Just hours after speculations, chipmaker Broadcom late on Monday signed a definitive agreement to sell its end-user computing unit to investment firm KKR for $4 billion.

When the transaction is final, the end-user computing (EUC) division will become a standalone company run by its existing management team and led by Shankar Iyer, the investment firm said in a statement.

The newly acquired division will have greater access to growth capital, KKR said. In addition, the investment firm said that plans are afoot to expand EUC’s research and development division and go-to-market functions, including sales, customer success and partner support teams.

Broadcom acquired the end-user computing business when it finalized its $61 billion purchase of VMware in late November. The EUC division includes the desktop virtualization platform Horizon and unified endpoint management platform Workspace ONE.

The chipmaker’s chief executive officer Hock Tran said back in December that Broadcom was looking to divest non-core divisions of VMware, including the EUC and Carbon Black.

When asked specifically about the reasons behind divesting the end-user computing and Carbon Black divisions, 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 wanted to focus on those divisions where it saw “the biggest value for its business model.”

End-user computing and Carbon Black jointly contributed close to $2 billion in revenue on an annual basis.

The EUC deal, which was made through KKR’s North America Fund XII, is expected to close in 2024.

Once that happens, the investment firm expects the EUC division to implement its broad-based employee ownership program, which makes all employees owners in their respective businesses alongside KKR.

“This strategy is based on the belief that employee engagement and a strong ownership culture are key drivers in building stronger companies,” the investment firm said, adding that since 2011, KKR portfolio companies have awarded billions of dollars of total equity value to over 60,000 non-senior management employees across more than 40 portfolio companies.

KKR has a huge portfolio of investments in the IT sector, including deals signed with BMC, Ensono, and Contabo.