VMware shareholders will elect to receive either $142.50 in cash or 0.2520 shares of Broadcom common stock for each VMware share.
Questions:
When In the process will I be asked to choose?
What will happen to UNVESTED RSU? They will simply converted by the number or shares? Meaning we are riding 100% on avgo new high? If so, this is close to 50% up side to unvested RSU from current VMware price.
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The formula for stock value is ((#VMW x 0.5 x $142.50) + (#VMW x 0.5 x $AVGO x 0.252)). Assuming 50/50 split for stock and cash value payout.
It's not #VMW shares x 0.252 x $AVGO. 50% of your VMW stock payout will be in cash @ $142.50 and will not be converted to AVGO stock (with current assumptions).
We’re inching closer to 142. Does that mean the market finally has increased confidence in the merge?
If the merger fails, $95 would be a best-case scenario. Its failure could also taint VMW brand, even if VMW had no play in the decision.
or possibly worth $65 in five months.
VMW was $95 before the merger announcement. Makes sense it will at least go back to that if the merger fails.
spend $130 today for something possibly worth $173 in five months
or possibly worth $65 in five months.
a current valuation of $173/share of VMW stock.
And yet people won't spend $130 today for something possibly worth $173 in five months.
200 shares of VMW stock could likely pay out 50/50 cash and stock, as 100 shares at $142.50 per share ($14,250) plus 100 shares x 0.2520 AVGO @ $812/share = $20,462. That's a total of $34,712 for a current valuation of $173/share of VMW stock.
Yes. There’s the potential to make a lot of money. But the reason why VMW is not higher is because the market is not confident the deal will happen. If it fails then the stock will drop, like a stone :)
Hey,
Am I correct if I say that if you buy today VMware shares for 133$, you'll then be entitled to convert them to 0.2520 x 812$ (actual stock price for Broadcom) so 204$ per share. The potential benefit is around 79$ per share as per actual values in potentially 3/4 months time.
Seems that either the market doesn't believe in the acquisition at all or I am missing something, looks to great of an opportunity.
Anyone knowledgeable to correct or confirm ?
Unvested for the majority of people (based on level) won't count and will just be gone if role eliminated. It's all about RSU'S that have vested, simple as, focus on that.
For held shares E*Trade or your broker will contact you to identify how you want the distribution. At this point everyone will ask for AVGO stock as the would convert at around $200/share as of 5/26. What will happen when the deal closes? I believe it will be a 50/50 split irrespective of your choice given the price spread between AVGO and VMW.
Invested RSUs- hopefully they will vest prior to closing but I’m not 100% sure as I haven’t seen the policy on that.
If you are an employee this information is widely available internally, but yes unvested RSUs are converted to AVGO at the same rate as the acquisition, if you stay employed ofc. You will be asked to elect for cash or stock at some point before close, but since most people, including Dell who owns 50%, will opt for stock, we will all end up getting a 50/50 cash/stock split.