Broadcom-VMware deal could make servers more expensive, UK regulator warns
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Broadcom's (NASDAQ:AVGO) proposed $61B deal to buy VMware (NYSE:VMW) could make servers more expensive in the U.K., the country's antitrust regulator said on Wednesday.
In a statement, the Competition and Markets Authority said the deal could impact the prices of network interface cards and storage adapters - both used in servers - as well as virtualization software for servers, potentially lessening innovation in the space.
"We are concerned this deal could allow Broadcom to cut out competitors from the supply of hardware components to the server market and lead to less innovation at a time when most firms want fast, responsive, and affordable IT systems," David Stewart, Executive Director at the CMA, said in the release.
Broadcom (AVGO) has five days to offer proposals to the CMA on how to address the concerns raised by the regulator. The CMA would then have an additional five days to consider the proposals put forth by Broadcom (AVGO) or go further in its inquiry.
In a statement to Seeking Alpha, a Broadcom (AVGO) spokesperson said the company is "working constructively" with the CMA on the matter. 
"We will demonstrate that the transaction enhances competition and benefits businesses and consumers through increased quality, innovation and choice," the spokesperson said via email, adding that the merger has already received clearance in a number of countries.
Both Broadcom (AVGO) and VMware (VMW) rose in mid-day trading on Wednesday. 
The $61B cash-and-stock deal first came under scrutiny in the U.K. in November when the CMA said it was looking into the deal to see if it could result in a "substantial lessening of competition."
In May 2022, Broadcom (AVGO) announced its intentions to acquire VMware (VMW) with the intent to transform the company from overly relying on semiconductors and more on software and services.
Broadcom (AVGO) reported strong first-quarter results and guidance earlier this month, leading to substantial praise from Wall Street.