Shares in Broadcom and VMware have seen an increase despite a potential delay in the completion of their merger agreement. The closing of the deal was originally scheduled for Monday but has encountered some uncertainties. Nevertheless, investors are not overly concerned.
Broadcom’s stock (AVGO) has gained 1.6% in premarket trading, outperforming futures tracking the S&P 500 and Nasdaq indexes. VMware (VMW) shares have also shown a positive growth of 1.3%.
Chip maker Broadcom aims to acquire cloud computing group VMware in a deal worth $75 billion. While the merger was expected to be finalized on Monday, a somewhat vague press release from the companies suggests a delay.
In their joint statement released on Monday morning, Broadcom and VMware expressed their anticipation that the acquisition will conclude “soon,” though failing to provide a specific timeline. This ambiguity contrasts with a previous statement made by a VMware spokesperson, who claimed the deal was on track for Monday. The potential obstacle appears to be in China, where regulators have yet to grant approval for the merger. Recent tensions between the United States and China regarding technology have further intensified the scrutiny surrounding this transaction. However, despite these uncertainties, investors remain optimistic. Additionally, both companies confirm that there are no legal barriers within the United States that would prevent the completion of the deal.
“The parties have received legal merger clearance in various countries, including Australia, Brazil, Canada, the European Union, Israel, Japan, South Africa, South Korea, Taiwan, and the United Kingdom, as well as foreign investment control clearance in all necessary jurisdictions,” clarified the companies in their joint statement. “Under U.S. merger regulations, there are no legal impediments to the closing of the deal.”