If regulatory clearances aren’t granted, Broadcom will be forced to pay a whopping $1.5 billion termination fee to VMware.
About 50K dollars per employee if deal not closed.
7 replies (most recent on top)
No matter what, let’s just hope the c-suite lands on their feet!
God bless each and every one of them.
It's not $50k per employee.
It's $3.47 per share.
They'll pay off our poor exec staff their few dozens of millions and we'll see a mutually agreed reduced termination fee. It's bogus.
There are going to be a lot of shareholder lawsuits I think if this fails.
In the case of Qualcomm, there’s no public information available on whether this fee was actually paid by Broadcom after the deal was blocked. It’s possible that such details were not disclosed due to 'confidentiality agreements' or other legal considerations.
AVGO lawyers will negotiate a settlement with the VMW legal team. That's how it works. So, the termination fee issue is very manageable. Hock's been there, done that.
The termination fee risk is the cost of doing business in M&A. Hock Tan would not have agreed to the fee were he not prepared for a 'last resort' scenario if the deal failed.
Read the history on this topic. Hock has previously experienced failed acquisition deals and survived. He and his legal team can walk away from this ongoing fiasco if they have to.
Broadcom agreed to pay Qualcomm $8 billion if regulators blocked the proposed merger between the two computer chip giants. Broadcom called this a "regulatory reverse termination fee". The deal collapsed, but Broadcom survived. Got it?
The $1.5B requires stockholders approval and then will be paid to them not employees.
I personally believe it will close, even with the Chinese headwinds. If it doesn't, I believe it will be even uglier with Michael Dell or Silverlake trying to execute Broadcom's plan, which any savvy business would if it means a better bottom line.