Every single institution that holds VMW does so because they believe the merger will happen. If they thought it wouldn't, the price would not be above $142.50.
Today VMW price is above $142.50, and AVGO is down. This is generally what happens to companies that are selling and acquiring, respectively.
With 50/50 stock/cash:
1/20.252955= $120.33
Total consideration= $191.58
Today price 11/16: $149.81
Difference: $41.77 per share
The people who are buying this for above $142.50 might also think that the deal will not happen, but also think that VMware would be worth $150ish to somebody else?
The person who said "do the math" has their math wrong. Shares of VMware are worth $193.58 now based on the Broadcom stock price.
all the new investors will get $142.50 per share.
That plus 0.252 of Broadcom stock, which today is at $955.
So do the math. That's about $175 per share if the merger is approved.
Just a basic understanding of how markets and money works would have you arrive at the opposite conclusion.
Enlighten us then, Mr Buffet!
I have seen a lot of people posting here but this one takes the cake. Just a basic understanding of how markets and money works would have you arrive at the opposite conclusion.
Most people waiting to sell. High volatility on open for sure. Unless they come up with a good ceo and a good plan. Probably will take months.
No matter how much you think you know, there is something that you don't know that would change your conclusion.
Then you can guess who is buying at 150.
This is bullsh-t. Anybody at this point who puts money into VMware is guaranteed to lose if the deal closes. The AVGO stock election is already filled up and if the deal closes, all the new investors will get $142.50 per share. Why would you buy a share at around $150 if you think you're guaranteed to cash out at $142.50? Is this some sort of fantasy land math?
I would say if anything, I would say deviation from the cash consideration of the deal at $142.50 is a sign investors are betting the deal won't close.
Yesterday the volume was high at 1.3 mil. Past few days the volume was.25 mil. But since only hedge funds are trading mostly not sure what is going on. Mostly stay flat until the deal is call off. They have to find the greater fools to buy after trading resumes.
But if the acquisition were a sure thing, then wouldn't VMW be at or slightly below $142.50? Maybe VMW at $150 is a bet that the deal deadline will be extended and the election will be re-opened, and that this is not a sure thing either way.
if it was an "all cash" deal. given its 50/50 Cash and AVGO stock this does not apply.
Nobody knows...still plenty of people here that think the deal will get done and there's no chance of it going south. There are other people that think the deal is already dead and nothing can save it. We will all know.....SOON
But if the acquisition were a sure thing, then wouldn't VMW be at or slightly below $142.50? Maybe VMW at $150 is a bet that the deal deadline will be extended and the election will be re-opened, and that this is not a sure thing either way.
Thank you, armchair hedge fund manager