Broadcom’s $1 billion deal to sell a security software business it acquired with its $61 billion purchase of VMware last year has hit a roadblock, or potentially been abandoned altogether. The investment firm KKR had initially agreed to buy Carbon Black along with VMware’s entire end-user computing (EUC) business, including Workspace ONE and Horizon offerings, in a deal worth about $4 billion. However, when Broadcom finalized its $3.8 billion transaction with KKR to sell the EUC business recently, Carbon Black was notably missing from the agreement, according to a report by Bloomberg.
The deal reportedly fell through due to “indications of interest” that did not meet Broadcom’s expectations. It is not clear if Carbon Black is still up for sale, but given Broadcom’s previous statement about divesting non-core divisions of VMware, it is likely that they are still seeking to offload the unit. Carbon Black, originally founded as Bit9 in 2002, has a history of transformation and was acquired by VMware in 2019 for $2.1 billion, specializing in endpoint security software.
Since becoming part of Broadcom through the VMware acquisition, Carbon Black has been part of the company’s efforts to shed excess products acquired in the deal. CEO Hock Tan’s strategy has been to focus on core divisions with the most value for the business model, leading to the divestment of EUC and Carbon Black divisions. This decision, though intended to streamline the company’s focus, has faced criticism from customers and industry experts, with concerns about the impact on the overall business strategy.
Broadcom’s acquisition of VMware faced regulatory scrutiny from competition authorities worldwide, including in the UK and the EU. Despite receiving the necessary approvals, the process highlighted the challenges of integrating such a significant acquisition and the need to balance strategic divestments to align with the company’s long-term objectives. Tan’s emphasis on focusing on key divisions reflects a broader trend in the technology industry towards consolidation and specialization to drive growth and innovation.
In the evolving landscape of cybersecurity and software solutions, companies like Broadcom are constantly evaluating their portfolios to stay competitive and meet changing customer demands. The decision to put the Carbon Black sale on hold or potentially abandon it underscores the complexities of managing a diverse product offering and the importance of strategic alignment with core business objectives. As Broadcom navigates these challenges, it will be essential to communicate transparently with stakeholders and maintain a clear vision for the future direction of the company.