Thread regarding VMware layoffs

Reasons why the deal dies on Nov 26

1. China has given no reason to think they'll approve a new deal between BC/VMW
2. A new deal also means new financing at much higher interest rates than during the inception of the original takeover deal.
3. A new deal contract means we start all over again. Board and share holder approvals are going to be required. I'm not 100% sure, but I think regulatory approvals have to be done again (though presumably faster this time).
4. VMW gets $1.5Billion for it's troubles.

Reasons why the deal gets renegotiated.

1. MD can potentially get more money
2. MD and VMW have $1.5Billion in renegotiating leverage
3. MD and SL want their money.

But whether or not it gets done, these things will DEFINITELY happen.

1. There WILL be layoffs. The duplication cuts won't happen but there is a lot of FAT to cut from VMW. MD will see this as making VMW more attractive to a new buyer. The planning for these cuts has already been done. There isn't any reason to not go through with them.
2. The BUs will still become just one BU. VMW has been too highly silo'ed for too long and the planning is done to resolve that.
3. EUC will still get spun off or sold. It just makes sense to stay the course on this one.
4. VMW will have a new buyer before the end of 2024.

Whether the "outside date" is a hard stop or not, what's the value proposition to keeping this going when Chinese approval may NEVER be forthcoming? Even if extending doesn't mean completely renegotiating (IANAL so I don't know how true that is) why would they expect China to suddenly decide to approve? Almost as importantly, there are going to be absolutely epic (pun intended) lawsuits if they try to keep the stock locked up. Even if Nov 26th isn't some sort of magical expiration date, I don't see what VMW or BC would gain by pretending that China is going to approve "soon."

Regarding the Chinese fines, from what I've read they're ongoing until the companies do whatever China wants them to, up to and including unwinding the deal. And from an M&A expert I was reading (on an unrelated topic, not specific to VMW/BC) he claimed that the fines for unapproved mergers were based on global revenue, not just what they make in the Chinese market.

Why do people think that going beyond the outside date of November 26th automatically mean everything needs to be renegotiated? It doesn't seem to be the case.

As far as I can see both partes have the right to walk away at that point, without paying terminations fees, nothing more. Which of them do want to walk away, Mr De11 or Mr T@n? (who else matters?) The former wants to get his money and run, and the latter wants to crown his corporate achievement.

And how long does everyone have to wait then beyond the outside date? Can we stay in this state indefinitely? Who decides that? Who calls time on it?

The short version of the below extract is that the "outside date" means nothing in the case where both parties want to keep going:

https://mergerarbitragelimited.com/finance-and-investment-glossary/outside-date/

"The outside date is a date where both parties have agreed in advance that if the merger or acquisition has not yet completed either side can terminate the merger agreement and walk away from the deal free of any penalties. However, it is often stipulated that if certain duties were not performed by a given party prior to the Effective Time, the act of termination under this clause will not be available.

The actual significance of the date is not as final as it may suggest. The date is neither the forecast completion date, the expected completion date, nor even the latest completion date. It is in rare circumstances such as Qualcom’s (QCOM) bid for NXP Semicondctor (NXPI), that one the parties invoke this clause and walks away, although in QCOM’s case, a reverse termination fee was paid. Having not received clearance from SAMR, QCOM decided the time had come to terminate. Therefore, both parties may agree to extend, if for example more time is required to complete an ongoing regulatory review such as a second request for information under HSR, which is likely to produce a positive outcome. "

I’d guess selling off divisions of VMware to PE firms will be easier to pull off and give MD and SilverLake opportunities to make some significant money with less government involvement.

Thinking this through, I don't think MD was in it for Quick Buck, He was playing the long/bigger game. if the deal goes through, he would be the individual holding the highest number of AVGO Shares, Could even become the chairman with SL backing.

If the deal falls through, why would he breakup a profit making company? sure there is no course correction happened in a while due to/during pandemic and followed by the acquisition announcement, but some of the correction could happen if the deal falls through and continue to keep the company as is. It's not like he's planning on using the money to clear Dell Technologies debt or anything. Why would he spend his personal Money to clear Dell Technologies debt?

Anyways, that's my thought others please chime in.

This obviously cannot continue.

Why not? Is there some physical law of the universe preventing it from happening?

These are all speculations. people are making assumptions without any information. I would wait for official BC-VMC statement next week or before BC results on Dec 7. One thing might be difficult for BC/VMW to block the vmw stock from market.

@OP - Dont disagree with a lot of what you are sayings but want some clarification. 1) I also read the fines out of China for going ahead wo permission would be 10% of "turnover". I did not see what the extent of turnover was limited to but I "assumed" it was turnover in country, or the $11B China does ($1.1B fine). 2) I also "assumed" this was a one time fee and not on-going. Do you know if this would be an on-going perpetual series of fines until cured?
I'd also add, Customers are not doing anything right now. They are not engaged in conversations with us because they want to see how things shake out with BC, additionally we cannot provide any quotes we can commit to outside of a week. The majority of Sales is at a stand still which would continue if the deal was extended. This obviously cannot continue.

No one is going to try to do $70-$100 billion global acquisitions of public companies for quite a while.

I’d guess selling off divisions of VMware to PE firms will be easier to pull off and give MD and SilverLake opportunities to make some significant money with less government involvement.

Pretty sure this deal is dead. If China was going to approve, they would have done so by now. If Hock was going to close without their approval, he would have done so by now.

An extension is out of the question at this point as it would involve a total renegotiation and nobody wants to go through this for another 18 months.

Right now, we need to build some stability or put us back on the right track and some new leadership. I think that will happen and MD will set some strict targets. If we don’t hit them, I think we’ll be broken up and sold off bit-by-bit because as a whole, we’re too expensive for anyone.