VMware Inc’s stock price fell 10% on Thursday following a Financial Times article stating that the Chinese State Administration of Market Regulation is likely to delay signing off on the company’s $75 billion-plus merger with Broadcom Corporation (NASDAQ:AVGO) amidst rising US-China tensions as Washington strengthened rules to block Chinese access to high-performance semiconductors.
Barron’s now estimates the probability of the deal closing at 50%, down from 90% on Monday.
The publication calculated that VMware stock ended Thursday about $30 a share below the current value of the Broadcom cash-and-stock offer, which was worth about $180 a share.
VMware shareholders have the option of getting 0.252 shares of Broadcom for each share held, or $142.50 in cash.
The merger agreement, which was announced in May 2022, would also see Broadcom absorbing $8 billion of VMware's net debt.
Broadcom stated that it still expects to close the VMware acquisition on October 30.
About a third of Broadcom’s $33 billion in annual revenue came from shipments to China, the Financial Times reported.
Shares of Broadcom slipped 2% in Thursday’s trading session and eased 0.6% to $862.79 on Friday.
Contact Sean at sean@proactiveinvestors.com