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Broadcom has missed its self-imposed deadline to close the VMware acquisition
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It is still awaiting Chinese regulatory approval
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Broadcom said that it will close the deal before the agreement expires on November 26
Broadcom is running it down to the wire in its planned $61 billion acquisition of multi-cloud maven VMware because it is still awaiting approval for the deal from Chinese regulators.
Broadcom said on Monday in a statement that it expects the acquisition to close “soon” and before the M&A agreement between the companies expires on November 26. If the merger is terminated because the deal doesn’t get the necessary regulatory approvals, then Broadcom will owe a $1.5 billion fee under the terms of the deal.
The Chinese regulators are the last major impediment to the deal closing. “There is no legal impediment to closing under U.S. merger regulations,” Broadcom stated on Monday. Regulators all over the rest of the world have already approved the deal.
Broadcom had said it expected to close the deal by the end of October but is still currently in the regulatory weeds in China.
"The delay is rumored to be based on geopolitical issues with respect to the relationship between the U.S. and China and sensitivities around semiconductors and wider market implications, which undoubtedly could present a challenge," Bola Rotibi, chief of enterprise research at CCS Insight told Silverlinings in an email. "I am guessing that much is going on behind the scenes to unblock whatever the hold-up is."
She said that there is talk that the meeting between presidents Joe Biden and Xi Jinping in San Francisco in November may "help to quicken things if relationships between the two economies become smoother as a result."
The analyst said that she is "cautiously optimistic " that the deal will be close before the November 26 deadline. "Especially given that it has been signed off by all the other key global regulatory bodies," Rotibi said.
Broadcom wants to acquire VMware to have access to its infrastructure software portfolio, according to Broadcom CEO Hock Tan, who has noted that this portfolio includes many multi-cloud and cloud-native elements. His logic is that a combined Broadcom and VMware behemoth would encourage customers to “modernize and architect their IT infrastructure” safe in the knowledge that they are backed by large-scale systems to do so.
There are already reports of job cuts at VMware ahead of the deal closing.
Read up on our coverage of this extended acquisition here an d check back often for our updates on this deal:
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VMware customers should find 'exit ramps' ahead of Broadcom deal: Gartner
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Broadcom’s $61B deal to acquire VMware raises questions for customers
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