In what scenarios does the Broadcom-VMware deal fall through?

For all those VMware employees hoping the Broadcom deal doesn't go through, here are scenarios. All highly unlikely.

The go-shop ends on July 5. Another suitor would need to offer more than $61b + the $750m breakup fee. Highly unlikely that anyone else would be interested in offering that price, especially after the bad Q1 VMware had. A best case scenario for VMware employees is a buyer like Google, Intel or Nvidia, who wouldn't layoff a lot of people.

After July 5, the only other way the deal doesn't go through, is the US DOJ or the EU anti-trust block the deal because some Broadcom competitor, like AMD, Intel, Nvidia, complains. Or the DOJ blocks the deal because of the investigation already underway by the FTC on Broadcom anti-competitive business practices https://www.theregister.com/2022/04/25/ftc_investigating_broadcom_for_anticompetitive/. Or maybe customers gang up and complain to the FTC about price hikes they have already faced on CA and Symantec products, fearing the same with VMware products. The DOJ blocked Broadcom's hostile acquisition attempt of Qualcomm a few years ago. So the VMware deal is not a slam dunk for Broadcom.

Either way, this acquisition is going to take one year to sort out and get all the regulatory approvals. So everyone just chill out, take long vacations, don't work extra hard. The external recruiters will be hard at work picking at VMware talent.

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A $95 stock that was headed down to $60 after Q1 results, so maybe $140 was a good price to settle for. Still seems disappointing when VMW was $200 not that long ago.

Another suitor would need to absorb the debt too, so you’re looking at like $70B. (Well, AVGO could just match it too, so they would have to go WAY over, high enough that AVGO lets it go.) Anyone paying that amount of money will want to get way more than $3.5B a year out of it, which means they will also have massive cuts, so the fate would be the same for the company and employees. (And really what would Google even want out of VMW? And what would they want for >$70B. And why would you think they would keep all the bloat of VMW? 40k employees for $13B revenue versus 150k employees for $250B revenue, like AVGO, GOOG is also 4x more efficient in terms of revenue per employee, so they would also layoff 75% of VMWers.)

The Broadcom competitors you mention are all chip companies. Remember Broadcom is a holding company (like a PE firm), and “Broadcom the chip company” is just one of their holdings. This is not the kind of thing that gets blocked due to antitrust.

As for pricing monopoly, any arguments towards that would also apply to standalone VMW, the simple fact of AVGO buying VMW doesn’t change that. (It’s not like the combined company get some kind of great monopoly combination. AVGO is just a random collection of tech companies.)

And the DOJ didn’t block the AVGO / Qualcomm deal, Trump did it via an EA. (And that was allegedly due to national security, not antitrust.) But Qualcomm is more important to the US national security than VMW is, and also the reason back in 2018 was because AVGO was based in Singapore, but they’ve since moved to the US.

Really there is no viable path to this deal getting blocked or falling through. The only reason the go shop is in there is so the VMW board members could feel like they were doing the best thing for the shareholders, which, considering AVGO is offering $142.50 for a $95 stock was already pretty clear.

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In what scenarios does the Broadcom-VMware deal fall through?

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