Broadcom’s $61 Billion VMware Deal in Limbo as Chinese Regulators Reportedly Halt Approval
In a high-stakes race against time, Broadcom is facing a major hurdle in its acquisition of VMware. The deal, which was announced back in May 2022, seemed poised to close after navigating various regulatory challenges. However, reports indicate that Chinese regulators are now holding up the transaction, adding an unexpected twist to the already complex negotiations.
The expiration date of the deal is fast approaching on November 26, and if the acquisition falls through, Broadcom will be required to pay a hefty $1.5 billion termination fee. Despite the potential setback, Broadcom remains confident that the deal will close before the deadline. In a statement, the company expressed its expectation that the acquisition will be finalized, but did not provide further details on the delay or the reasons behind its confidence.
While Chinese authorities have not been explicitly mentioned, it is widely speculated that their review process is causing the delay. The Financial Times reported that China’s decision will play a crucial role in determining the deal’s fate. With limited time remaining, there is concern that the regulators might intentionally prolong their evaluation, effectively thwarting the agreement.
Experts suggest that the situation carries political implications, hinting at a possible tit-for-tat dynamic between the United States and China. Ray Wang, a renowned analyst, believes that China’s approval is being used as leverage in response to recent U.S. export controls on AI chips. This highlights the intricate web of geopolitical maneuvering that can impact billion-dollar tech deals.
If the acquisition is successful, VMware, a major player in virtualization technology, will become part of Broadcom’s portfolio, which mainly focuses on chip manufacturing. This unlikely marriage has raised eyebrows in the industry, particularly when considering Broadcom’s previous acquisitions of traditional enterprise software companies.
All eyes are now on China’s final decision, as it holds the fate of this massive deal in its hands. Despite Broadcom’s optimism, the clock is ticking, and the outcome remains uncertain. The next few weeks will undoubtedly be crucial in determining whether the $61 billion VMware acquisition will become a reality or end in a costly termination.
