U.S. semiconductor giant Broadcom is confident that its $69 billion acquisition of cloud-computing firm VMware will proceed and close before the November deadline, despite concerns from investors about obtaining China’s approval for the deal.
China’s State Administration of Market Regulation (SAMR) has not yet granted its approval for the acquisition, and there are indications that the decision might be delayed. The Financial Times reported earlier this month that this delay could be linked to the stricter chip controls introduced by the U.S. President Joe Biden’s administration.
In a statement issued on Monday, Broadcom and VMware did not provide specific details regarding China’s approval but stated that there are “no legal impediments” to closing the deal under U.S. merger regulations.
Broadcom has already secured legal clearance for the merger in various countries, including Australia, Brazil, Canada, the European Union, Israel, Japan, South Africa, South Korea, Taiwan, and the United Kingdom. Furthermore, they have obtained foreign investment control clearance in all the necessary jurisdictions.
This acquisition marks Broadcom’s largest-ever deal, comprising $61 billion in equity and the remaining amount in debt. It reflects Broadcom’s strategic move to diversify its portfolio by venturing into the enterprise software sector.
The deal also received approval from the European Union’s antitrust authorities, with Broadcom offering remedies to address any concerns and ensure healthy competition in the market, particularly with rival Marvell Technology.
Despite the challenges surrounding China’s approval, Broadcom remains optimistic about the deal’s eventual closure. This acquisition holds significant implications for both Broadcom and VMware, as they aim to capitalize on the growing demand for cloud-computing services and enterprise software solutions in an increasingly digital and interconnected world.
