Broadcom has announced that it has received approval from Chinese regulators to close its acquisition of cloud computing company VMware today. This means that the $61 billion acquisition is officially closed.
It is reported that on the evening of November 21, China's State Administration of Market Regulation issued an announcement on the anti-monopoly review decision on the approval of Broadcom's acquisition of VMware's equity with additional restrictive conditions.
At the same time, it shall not hinder or restrict the customer's purchase or use of the above products separately, nor discriminate against the customer who purchases the above products separately in terms of service level, price or function. The approval of these restrictive conditions provides a strong guarantee for the successful completion of the transaction.
Pierre Ferragu, an analyst at New Street Research, said in a note that the approval of the deal could signal a thaw in relations between the two countries following a meeting between the two presidents on the sidelines of the Asia-Pacific Economic Cooperation (APEC) meeting. However, export restrictions remain a topic of concern.
Ferragu said: "This acquisition represents a transformation for Broadcom. VMware has become an important ally for Broadcom in terms of enterprise access to the software market."
Broadcom shares were down 0.98% at $985.96 in intraday trading on Tuesday, as of press time. VMware's stock was down 4.74 percent at $142.81. Under the terms of the deal, shareholders will have the option of receiving $142.50 per share in cash or 0.252 shares of Broadcom stock in exchange for each VMware share.
Although shares of both companies fell, analysts were generally positive about the Chinese regulatory approval. Bernstein analysts wrote in a note that the conditions "don't seem complicated" and "don't see anything objectionable to Broadcom."
With all regulatory approvals, Broadcom will usher in a new phase of enterprise development, and VMware will become an important part of Broadcom's software portfolio. The completion of this acquisition will have a profound impact on the industry landscape and provide a solid foundation for Broadcom's future strategic planning.
