KKR buys Broadcom’s remote access unit in $4 billion deal

In a strategic move to streamline its portfolio after the monumental $69 billion acquisition of VMware last year, chipmaker Broadcom has agreed to sell its end-user computing (EUC) unit to private equity firm KKR in a deal valued at $4 billion, Reuters reported.

As part of the acquisition agreement, the EUC unit will operate as a standalone entity under the continued leadership of its existing management team, led by Shankar Iyer, KKR said in a statement on Monday.

The deal, which is expected to be finalized in 2024, comes on the heels of reports by Reuters hinting at an imminent deal between KKR and Broadcom, adding momentum to the tech industry’s ongoing restructuring landscape.

The deal, which also follows Broadcom’s VMware acquisition after significant regulatory challenges, positioned it among the globe’s largest deals upon its unveiling in May 2022. Finalized in November 2023 following regulatory green lights, the acquisition set the stage for Broadcom’s subsequent strategic divestitures, including the recent move to shed its EUC division and explore options for VMware’s security software arm, Carbon Black.

Post the VMware deal closure, Broadcom expressed its intention to divest the EUC unit. Concurrently, efforts are underway to shed VMware’s security software business, Carbon Black.

Bradley Brown, Managing Director on KKR’s technology industry team, highlighted the firm’s active role in the enterprise software industry, emphasizing its playbook and differentiated perspective in aiding businesses like Broadcom’s EUC unit to thrive.

“KKR has traditionally been a very active investor in the enterprise software industry, and we have a differentiated point of view and playbooks that we can apply to help businesses (like Broadcom’s EUC unit) grow. So, we really coupled that kind of playbook with a long history in carve-outs,” Brown said in an interview.

KKR’s prowess in carve-outs is evident in its track record, with over 60 deals under its belt. Notably, in the previous year, KKR acquired publishing house Simon & Schuster for $1.62 billion from Paramount Global.

The EUC deal marks KKR’s strategic foray into the technology services sector, capitalizing on the surge in information technology (IT) spending during the COVID-19 pandemic, driven by the widespread adoption of remote work.

KKR’s history in the technology sector includes the 2018 purchase of U.S. business software company BMC for $8.5 billion. Subsequently, in 2020, it merged BMC with Compuware, acquired from technology-focused buyout firm Thoma Bravo. In 2021, KKR acquired information services technology provider Ensono for approximately $1.7 billion and, later that year, collaborated with Clayton Dubilier & Rice to privatize Cloudera for around $5.3 billion.

Evercore, Deutsche Bank, and Jefferies are advising KKR on the Broadcom EUC deal, while Citigroup is providing counsel to Broadcom. The move underscores Broadcom’s strategic realignment and KKR’s continued focus on carving out value in the dynamic technology landscape.

Over the years, KKR has established a strong track record of supporting technology-focused growth companies, having invested over $2.7 billion in related investments since 2014 and having built a dedicated global team of 19 investment professionals with deep technology growth equity expertise. In the last two years alone, the Firm has executed a number of transactions as part of this strategy, including in KnowBe4 and OneStream.