The recent merger between Broadcom and VMware has been a topic of much discussion in the tech industry. This merger, one of the largest technology deals ever, has seen the value of the transaction surge from the original $61 billion to more than $80 billion. The vast majority of VMware shareholders are set to get a windfall thanks to the run-up in Broadcom stock since the deal was announced.
Broadcom, a chip and hardware company, and VMware, a software producer, announced their merger in May 2022. The deal was subject to regulatory approvals and other customary closing conditions. The parties received legal merger clearance in Australia, Brazil, Canada, the European Union, Israel, Japan, South Africa, South Korea, Taiwan, the United Kingdom, and foreign investment control clearance in all necessary jurisdictions. There was no legal impediment to closing under U.S. merger regulations.
As part of the merger, each VMware stockholder was entitled to receive, for each share of VMware common stock held immediately prior to the closing of the transaction, either $142.50 in cash, without interest (the cash consideration), or 0.2520 of a share of Broadcom common stock (the stock consideration). The merger consideration was subject to proration so that 50% of the aggregate shares of VMware common stock outstanding immediately prior to the closing of the transaction would be converted into the cash consideration and the remaining 50% of the aggregate shares of VMware common stock would be converted into the stock consideration.
VMware stockholders of record of approximately 96% of the outstanding shares of VMware common stock elected to receive the stock consideration. In accordance with the proration procedures in the parties’ merger agreement, approximately 52.1% of such outstanding shares of VMware common stock were converted into the right to receive 0.2520 of a share of Broadcom common stock per share of VMware common stock and approximately 47.9% of such outstanding shares of VMware common stock were converted into the right to receive $142.50 in cash per share of VMware common stock.
The merger was approved by 99.61 percent of the company’s shares — some 352 million — with 681,000 opposed. This approval cemented a critical step that moved the deal closer to the finish line.
The merger between Broadcom and VMware is a significant event in the tech industry. It not only represents a major consolidation in the sector but also a windfall for VMware stockholders. The run-up in Broadcom’s stock since the deal was announced has resulted in a significant increase in the value of the transaction, benefiting VMware’s shareholders. This merger is a testament to the dynamic and ever-evolving nature of the tech industry, where such large-scale consolidations can lead to significant financial gains for shareholders.
