Let's say China does not give its approval by then, can they renegotiate and extend the deadline beyond November 26 2023, or is that the absolute final date?
19 replies (most recent on top)
"A new agreement to amend one item is no where near the effort to create the agreement from scratch, so creating a new agreement and getting less than a dozen people in the room to execute it does not sound hard at all."
Your right, it does not sound hard at all, until you start complying with SEC regulations on publicly held companies. Following the rules is the price you pay to have access to the largest equity market in the world. This isn't like buying a bike from your neighbor for your kid. Or even buying a car or a house. It is a publicly traded company, look into it.
Moreover, until they settle the termination fee and expense issue why amend anything?
To me it looks like MD might get his hands on 51% of $1.5B if the agreement terminates. At the very least it is a stronger negotiation position when coming to terms on the new agreement. And completely agree that MD would likely like to extend, the deal is looking better and better from his side as time has gone on. However, the other 49% DO get a say, in the form of a vote.
A new agreement to amend one item is no where near the effort to create the agreement from scratch, so creating a new agreement and getting less than a dozen people in the room to execute it does not sound hard at all.
A key milestone will be the term of the current interest rate agreed for the purchase loan, surely when this term expires and a new rate needs to be negotiated it may no longer be financially viable? If so, anyone know that date?
"Won't the AVGO board of directors suggest to Hock that it's no longer in their best interest? How much denial of reality is enough, and then he can make a graceful exit? "
I think you meant to say Michael Dell and Silverlake who still ow 51% of vmware
https://www.sec.gov/Archives/edgar/data/1124610/000114036122035833/ny20005454x1_defm14a.htm
Read starting on page 118 at the bottom.
Control F for "extensions" - or whatever else you think might be relevant.
I am not a lawyer, but I have read my fair share of legalese; the way I read this?
The 'outside date' is Nov 26th and cannot be moved as there is no extension clause on the 'outside date'. If the date comes and passes, and the first of the holding company stock transfers does not happen by Nov 26th 11:59PM New York time then the agreement is terminated. Let the arguments begin over who owes who expenses and the $1.5B termination fee. I am sure there will be negotiations between folks with law degrees on that front. (Regulatory approval is ultimately an AVGO responsibility, also spelled out in the agreement)
Change the date (Nov 26th)? Sure, you absolutely can, in a new agreement that would then have to be approved by a shareholder vote; just like THIS agreement was originally. That took from roughly May to the following February (26th) to take place for this agreement............
Bottom line: The agreement filed with the SEC is the current framework of the deal and it HAS a naturally occurring termination date whereby certain actions have to take place or termination is triggered.
Follow the money.............
if the deal doesnt go thru, HT will quit as CEO of BRCM and Raghu will become the new CEO of BRCM to drive generative AI
Multi-cloud, private AI, generative.
I thought Magoo was going to create a new business named “MyCrumpledShirt.com”
Comes with a side of AI
if the deal doesnt go thru, HT will quit as CEO of BRCM and Raghu will become the new CEO of BRCM to drive generative AI
The real issue here is that there is one party that really needs to sell – or so it was published last year – Michael Dell. So disregarding if this goes through with BC, Dell will sell his part to whomever comes first if the deal with BC is cancelled. Can he do it without the intervention of any regulators? Yes, he can. That won't be a company acquiring another one (or a merger if you will), it will be a particular transaction of stock to, very possibly, an investment fund. So come what may, big changes are coming to VMW because a fund DEMANDS results as VMW has not delivered in a few years now.
It wouldn't be the first time that a big deal goes wrong like this but the insistence of HT from the very beginning, the absolute affirmation that it was going to get closed before 30th October, the flagrant cockiness... He's going to have to give so many explanations!
The parties cannot extent forever - especially now that shareholders who have made an election of stock or cash can't even trade.
Now you can argue, Shareholders won't wait forever or approve such an agreement.
In AVGO case that is a possibility, where as in VMW case, there is one Ding Do-g and then there is Silver Lake, you have the votes you need. So ...
The parties cannot extent forever - especially now that shareholders who have made an election of stock or cash can't even trade.
No Such rule, as long as both parties agree.
...the reality is a lot of the cuts that BC plan are actually necessary, and a new leadership
team is desperately needed if the deal does fail.
True, and so I think that there will be major changes at VMware immediate following the outcome regardless of what it is. Cuts under continued VMW leadership may not be as deep as they would be under Broadcom leadership/ownership, but deep cuts are coming for sure either way, of that I'm very sure, even WITH a $1.5B pay day for VMW.
Not that Jim Cramer from CNBC is always or even all that often right in his prognostications, but he thinks the deal will close this week, otherwise, he thinks they'll have to walk away and cancel the deal. Having said that, I guess he thinks that Hock will be forced by the board and/or investors to make a decision either way by next week if he doesn't hear what he needs to from China by then. Let's hope that is the case, so that one way or the other, this soap opera is finally over by next week at the latest and people with a stake in either company (employees and/or investors) can move on with their lives.
The final snag with the deal is geo political battle between the US and China. Nothing specific in the deal is a hold up it seems.
Biden and Xi Jinping are having a pow wow in the coming weeks, and they are “a step closer” to talking about an agreement. China don’t care about the innards of this deal, only the broader political issue. There’s nothing Broadcom can do to fix that of course, and you’d wonder how eager the US are to cooperate with China. Does Hock have to fall on his sword? Will greedy Dell allow this deal to fail?
Outside of deal/no deal, the reality is a lot of the cuts that BC plan are actually necessary, and a new leadership team is desperately needed if the deal does fail. The current crew had their chance to make a difference and failed. The failure goes back as far as Pat in reality.
It’s a frustrating and anxious time for everyone. What a $h1t show!
...and then he can make a graceful exit?
Maybe, but I don't think that many people out there including himself would see having to pay VMW $1.5B as graceful exit...more like a "with tail between your legs" exit, which I don't think he'll allow at any cost unless he has no choice and is forced to by the board, so I see this dragging on until at least the close of Nov. 26th unless he manages to give China whatever they're looking for beforehand, which is not likely since it is likely out of his hands seeing as it is most likely due geo-political realities he cannot control.
"The merger agreement allows for three 3-months extensions."
Won't the AVGO board of directors suggest to Hock that it's no longer in their best interest? How much denial of reality is enough, and then he can make a graceful exit?
They can mutually agree to continue if they want but that would just be delusional on both parts. Flogging a dead horse but quite funny to watch at the same time I think.
Not true. The merger agreement allows for three 3-months extensions. Nothing beyond that. The extension from August to November was the final one.
The parties cannot extent forever - especially now that shareholders who have made an election of stock or cash can't even trade.
The markets would not like it either. This can not drag on forever....
They can mutually agree to continue if they want but that would just be delusional on both parts. Flogging a dead horse but quite funny to watch at the same time I think.