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Broadcom Completes $69 Bn. Acquisition of VMware Despite Regulatory Hurdles

 |  November 22, 2023

In a major development, Broadcom successfully concluded its $69 billion acquisition of cloud-computing firm VMware, marking one of the largest deals globally in 2022. The acquisition had faced prolonged regulatory scrutiny worldwide, with the last major hurdle – regulatory approval from China’s authorities – now overcome.

Broadcom, under the leadership of CEO Hock Tan, aimed to bolster its software business through this strategic move. The deal, initially announced in May 2022, experienced several delays in closing, leading to heightened concerns among investors. The transaction had been postponed three times, with the latest deadline set for November 26, reported Reuters.

The key breakthrough came on Tuesday when China granted regulatory approval, easing tensions that had risen due to the U.S.’s stricter chip export control measures. The approval followed a meeting earlier this month between China’s President Xi Jinping and U.S. President Joe Biden. Improved diplomatic relations played a pivotal role in securing the deal.

Related: EU Regulators Approve Broadcom’s $61 Billion Acquisition Of VMware

Danni Hewson, Head of Financial Analysis at AJ Bell, commented on the positive developments, stating, “The improved mood music after the meeting between China’s President Xi Jinping and U.S. President Joe Biden earlier this month helped to settle remaining nerves.” This reassurance came after Broadcom and VMware announced their intention to close the transaction on November 22.

The regulatory landscape had posed challenges globally, with the European Commission requiring Broadcom to provide remedies to support rival Marvell Technology before granting approval. Meanwhile, the UK’s Competition and Markets Authority (CMA) conducted an in-depth investigation and ultimately gave its green light to the acquisition.

Cabot Henderson, Market Strategist at JonesTrading, expressed cautious optimism about the broader impact of these regulatory successes, saying, “Perhaps we will see some boards being willing to move forward now that we have seen the (Activision Blizzard) and (VMware) get blessing, but don’t think we can count on it.”

Source: Reuters