I know that this was discussed a lot of time already, but why VMW stock constantly underperform the S & P index and even Broadcom stock? I mean I guess it should be at least between 142 and Broadcom stock of 0.252 * 455 = 115 so I guess at least at 125 while it is at 108?
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Given the scenarios AVGO must be priced at around $565 to match the $142.5 VMW offer. If it’s less everyone will ask for cash and will only receive up to 50% in cash and the remainder in AVGO stock which if sold will be worth less than the $142.5 expected. This explains in part why VMW is trading $30 below the original offer price. You really need to track the Broadcom stock price to get a proper VMW valuation.
http://archive.fast-edgar.com/20221003/AK25GG2CZW22LZFK222P2Z42CAI8ZC22Z242/
At the effective time of the second merger, you will be entitled to receive, at your election and subject to proration, for each share of VMware common stock that you hold (i) $142.50 in cash, without interest (referred to as the cash consideration) or (ii) 0.25200 shares of Broadcom common stock (referred to as the stock consideration and together with the cash consideration, the merger consideration). You will receive cash in lieu of any fractional shares of Broadcom common stock that you would otherwise be entitled to receive.
You may elect a different form of merger consideration for each share you own. You may elect to receive (i) solely the cash consideration, (ii) solely the stock consideration or (iii) if you own more than one share, a combination of the cash consideration for a selected number of shares and the stock consideration for the remaining number of shares. Whether you receive your elected merger consideration will depend on the election of other VMware stockholders and a proration mechanism. For example, if you elect to receive solely the cash consideration or solely the stock consideration, and all other VMware stockholders make the same election, the consideration you receive will vary to the maximum extent possible compared to your original election. In such instance, you would receive the cash consideration in exchange for 50% of your shares of VMware common stock and the stock consideration in exchange for 50% of your shares of VMware common stock. The following examples illustrate the proration mechanism in the case of an oversubscription of either the cash consideration or the stock consideration (both if you elect solely the oversubscribed form of merger consideration and if you elect a combination of the cash consideration and the stock consideration). Note that for illustrative purposes, the following examples do not round shares to the nearest whole number.
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If you own 100 shares of VMware common stock and elect to receive solely the cash consideration, and 80% of the outstanding VMware shares elect to receive cash, 15% of the outstanding VMware shares elect to receive Broadcom common stock and 5% of the outstanding VMware shares do not make an election, you will receive cash in exchange for 62.5 of your shares of VMware common stock and Broadcom common stock in exchange for 37.5 of your shares of VMware common stock.
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If you own 100 shares of VMware common stock and elect to receive the cash consideration for 55 shares and the stock consideration for 45 shares, and 80% of the outstanding VMware shares elect to receive cash, 15% of the outstanding VMware shares elect to receive Broadcom common stock and 5% of the outstanding VMware shares do not make an election, you will receive cash in exchange for 34.375 of your shares of VMware common stock and Broadcom common stock in exchange for 65.625 of your shares of VMware common stock.
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If you own 100 shares of VMware common stock and elect to receive solely the stock consideration, and 80% of the outstanding VMware shares elect to receive Broadcom common stock, 15% of the outstanding VMware shares elect to receive cash and 5% of the outstanding VMware shares do not make an election, you will receive cash in exchange for 37.5 of your shares of VMware common stock and Broadcom common stock in exchange for 62.5 of your shares of VMware common stock.
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If you own 100 shares of VMware common stock and elect to receive the cash consideration for 45 shares and the stock consideration for 55 shares, and 80% of the outstanding VMware shares elect to receive Broadcom common stock, 15% of the outstanding VMware shares elect to receive cash and 5% of the outstanding VMware shares do not make an election, you will receive cash in exchange for 65.625 of your shares of VMware common stock and Broadcom common stock in exchange for 34.375 of your shares of VMware common stock.
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The proration of the merger consideration will not be known until immediately prior to or following the effective time of the second merger. VMware stockholders who do not make an election will be treated as having elected to receive cash consideration or stock consideration in accordance with the proration methodology in the merger agreement.
Does the price affect what BCOM will pay for us? Do they still pay the $142 a share if things drop?
Its a buying opportunity and in markets like this, who could ask for more.
10% delta is due to the odds the deal not going through at all