Broadcom (NASDAQ:AVGO)'s proposed acquisition of VMware (NYSE:VMW) may face a delay as China's State Administration for Market Regulation (SAMR) reviews the deal, following chip controls introduced by the Biden administration. This information came to light on Monday, according to the Financial Times.
The $61 billion deal, which involves both equity and debt diversification, is part of Broadcom's strategic move into enterprise software. While the specifics of China's approval process remain undisclosed, it is worth noting that there are no existing U.S. legal barriers to the acquisition.
Broadcom has already received global merger and foreign investment control clearance in several jurisdictions including Australia, Brazil, Canada, the European Union, Israel, Japan, South Africa, South Korea, Taiwan, and the UK. Furthermore, Broadcom managed to secure EU antitrust approval by offering remedies to Marvell (NASDAQ:MRVL) Technology.
This report was initially prepared by Harshita Mary Varghese and edited by Devika Syamnath.
InvestingPro Insights
In light of the recent news about Broadcom's proposed acquisition of VMware, it's important to consider some key metrics and insights provided by InvestingPro.
InvestingPro Tips for VMware indicate high earnings quality with free cash flow exceeding net income and a high return on invested capital. Despite a declining trend in earnings per share, the company has impressive gross profit margins. The stock is currently in oversold territory, according to the Relative Strength Index (RSI). You can find more tips on InvestingPro's VMW page.
As for the InvestingPro Data, the adjusted market cap of VMware stands at 61.4B USD. The company has a P/E ratio of 42.56 and an adjusted P/E ratio of 40.56 as of Q2 2024. The company's revenue for the last twelve months as of Q2 2024 is 13.61B USD, with a growth rate of 3.56%.
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