Broadcom Corporation (NASDAQ:AVGO) and VMware have received a list of conditions from Chinese regulators pertaining to their $69 billion merger, marking the last hurdle for the megadeal.
The Chinese state market regulator has outlined specific conditions that must be met for approval, with a focus on how the companies conduct business in the Chinese market.
The new development means that the two companies can move toward finalizing one of the largest technology mergers in history.
The conditions set by Chinese regulators include ensuring the interoperability of VMware's server software with local hardware, Bloomberg reported. The regulator emphasized that approval hinges on meeting these conditions and asserted its right to supervise and inspect the companies' adherence to the specified restrictions.
The proposed combination of the US chipmaker Broadcom and cloud software company VMware has already secured clearance from regulatory authorities in the EU, UK, South Korea, and Japan. However, China's approval is critical, given recent instances where Chinese regulators have thwarted major mergers.
About one-third of Broadcom's $33 billion in annual revenue comes from shipments to China.
As per the merger agreement, Broadcom is offering VMware shareholders the choice of $142.50 in cash or 0.2520 of a Broadcom share for each VMware share held. Approximately 96% of VMware shareholders have chosen stock consideration over cash.
Shares of both companies were trading lower ahead of Tuesday’s market open, with Broadcom down around 3.2% and VMware losing 4.5%.