Broadcom talks about the deal paying around $60bn for VMware Inc. People in the deal said that it would lead to the biggest takeover deals of the year. Broadcom and VMware aim at announcing a cash and stock deal worth around $140 a share. Some people in the deal warned that the price was still uncertain, it could move around.
Broadcom plans to tap a handful of banks for an approximately $40bn debt package in order to pay for the deal. In a discussion with Elon Musk’s agreement last month to buy Twitter Inc for $44bn, allows VMware to think that deals are doable. Although, the market is still very volatile these days.
Somehow, when the market declines, acquisition targets are more affordable. This is because sellers are willing to get stock as currency, hoping to receive a benefit when it rebounds. But private-equity firms remain flush with cash. Unfortunately, the volume of mergers and acquisitions has sunk since last year. Companies in the U.S. for instance have struck $780.5bn of mergers this year.
It means that it is down for 31% from the same period in 2021. Market swings allow the growing of uncertainty in the market. However, IPO activity has arrived in a virtual standstill. The epitome is Microsoft Corp’s pending acquisition of videogame heavyweight Activision Blizzard Inc. The acquisition was around $75bn registered as the biggest takeover.
VMware shares closed up nearly 25% at $119.49. The market value of the company was over $50bn. Shares of Broadcom, a semiconductor-software conglomerate closed down around 3% with a market value of $215bn, said the WSJ. $140 price a share represents a premium of around 50%. However, it is still under the high of more than $200 stock.
