Broadcom's planned acquisition of cloud-computing company VMware has been given the green light by regulators in the UK, marking a significant step towards completing the deal valued at $61 billion. While approvals from the US and China remain as the final major hurdles, this milestone highlights the progress being made.
UK Regulators Approve the Deal
US Approval Pending
The Federal Trade Commission in the US now stands as the last prominent Western regulator that needs to grant approval. However, there is still some uncertainty surrounding China's clearance process. Previously, Chinese regulators created obstacles for Intel by failing to approve its planned acquisition of Tower Semiconductor before a crucial deadline. This has raised concerns, considering Broadcom's revenue from China amounts to billions.
Potential Challenges in China
While the Intel incident has sparked fears that China may use its antitrust review process to disrupt deals, it should not be assumed that Broadcom will face the same fate. Notably, Broadcom's expansion is outside of the semiconductor industry, and China has recently approved significant mergers involving US companies, such as Microsoft's acquisition of Activision.
Optimistic Outlook for Broadcom
Broadcom expressed confidence on Monday, stating that it anticipates securing final regulatory approvals, including that of the FTC, before October 30. The company remains committed to working cooperatively with regulators worldwide and is well along in the process of obtaining all necessary regulatory clearances.
Broadcom shares saw a modest increase of 0.2% in premarket trading, while VMware shares showed more significant growth, rising by 6.6%.
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