Broadcom deal tempts a treacherously tasty trade

VMware

06/11/2023 16:23

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)
    By Jonathan Guilford
       NEW YORK, Nov 6 (Reuters Breakingviews) - The
chipmaker’s $82 bln acquisition of VMware hangs by a Chinese
thread. This lingering doubt has created a quirky anomaly on
whether a small slug of shares winds up being bought for cash or
stock, or not at all. There’s 25% upside to grab, but only for
the bravest arbitrageurs.
    Full view will be published shortly.
    Follow @JMAGuilford on X
    
    CONTEXT NEWS
Semiconductor maker Broadcom said on Oct. 30 that it expects to
close its acquisition of VMware, now worth about $82 billion
including debt, before the merger agreement expires on Nov. 26.
Approval from Chinese authorities remains outstanding.
    Investors had the option to elect to receive either $142.50
in cash or 0.252 Broadcom shares for each VMware share they own,
subject to proration such that 50% of consideration will be paid
in cash. The deadline to make that election passed on Oct. 23.
Since then, VMware shares purchased on the open market will, by
default, receive cash.
    The equity component of Broadcom’s offer is worth $221 per
share, resulting in a total average consideration of $182.47,
based on its closing stock price on Nov. 3.

 (Editing by Jeffrey Goldfarb and Aditya Sriwatsav)
 ((For previous columns by the author, Reuters customers can
click on  GUILFORD/  
Jonathan.Guilford@thomsonreuters.com; Reuters Messaging:
Jonathan.Guilford.thomsonreuters.com@reuters.net))