Broadcom Inc. and VMware, Inc. have announced their intention to finalize Broadcom's acquisition of VMware on November 22, 2023. The $69 billion deal has received all necessary regulatory approvals, including from China, which was the last regulatory holdout. The approval from China's State Administration of Market Regulation was conditional, requiring the combined company not to abuse its position in several areas.
The merger has received legal clearance in multiple countries including Australia, Brazil, Canada, China, the European Union, Israel, Japan, South Africa, South Korea, Taiwan, and the United Kingdom. The approval comes after a meeting between China's President Xi Jinping and US President Biden at the APEC summit.
The merger was initially announced 546 days ago. Analysts suggest that China needs Broadcom's networking products to remain competitive and that Broadcom's significant business in China was a key factor in the approval. However, concerns remain among some customers and employees about potential price hikes and layoffs following the merger.
The deal has sparked concerns among investors due to rising Sino-U.S. tensions and stricter export controls on high-end chips to China introduced by the Biden administration. Following the announcement, Broadcom shares fell by more than 1%, and VMWare shares dropped by 4.6%.
The merger is expected to result in deep cuts in the VMware sales ranks, potentially creating opportunities for partners. The deal will also result in a $22 billion windfall for VMware majority owner Michael Dell.