San Francisco, May 26 (IANS): In the second biggest tech deal of the year, chip and software maker Broadcom on Thursday announced to acquire enterprise cloud services provider VMware in a cash-and-stock deal valued at $61 billion.

In addition, Broadcom will assume $8 billion of VMware's net debt.

This is the second biggest tech deal of the year after Microsoft announced to acquire video game maker Activision Blizzard for $68.7 billion.

"We look forward to VMware's talented team joining Broadcom, further cultivating a shared culture of innovation and driving even greater value for our combined stakeholders, including both sets of shareholders," said Hock Tan, President and Chief Executive Officer of Broadcom.

In November last year, Dell Technologies completed the planned spin-off of VMware via tax-free distribution of shares to Dell investors.

VMware, a leading provider of multi-cloud services for all apps, pioneered virtualization technology, an innovation that positively transformed x86 server-based computing.

VMware then created the software-defined data center and played a leading role in virtualizing networking and storage, before evolving to become a hybrid cloud and digital workspace leader.

"VMware has been reshaping the IT landscape for the past 24 years, helping our customers become digital businesses," said Raghu Raghuram, CEO, VMware.

"Combining our assets and talented team with Broadcom's existing enterprise software portfolio, all housed under the VMware brand, creates a remarkable enterprise software player," he added.

Following the closing of the transaction, the Broadcom Software Group will rebrand and operate as VMware, incorporating Broadcom's existing infrastructure and security software solutions as part of an expanded VMware portfolio.

The deal accelerates software scale and growth opportunities for Broadcom, with pro forma revenue of more than $40 billion, including 49 per cent software revenue.

The combined company will provide enterprise customers an expanded platform of critical infrastructure solutions to accelerate innovation and address the most complex information technology infrastructure needs.

"Together with Broadcom, VMware will be even better positioned to deliver valuable, innovative solutions to even more of the world's largest enterprises," said Michael Dell, Chairman of the VMware Board.

Under the terms of the agreement, VMware shareholders will elect to receive either $142.50 in cash or 0.2520 shares of Broadcom common stock for each VMware share.

Michael Dell and Silver Lake, which own 40.2 per cent and 10 per cent of VMware shares outstanding, respectively, have signed support agreements to vote in favour of the transaction, so long as the VMware Board continues to recommend the proposed transaction with Broadcom.

In connection with the transaction, Broadcom obtained commitments from a consortium of banks for $32 billion in new, fully committed debt financing.

The transaction is expected to be completed in Broadcom's fiscal year 2023, said the company.