Broadcom to face in-depth European probe into VMware deal - report

Justin Sullivan

Braodcom (NASDAQ:AVGO) is expected to see an in-depth European antitrust review of its planned $61 billion purchase of VMware (NYSE:VMW), according to a MLex report.

The full investigation is expected to be announced on Dec. 20 with a deadline for the antitrust body to complete its review in mid May, MLex said. Broadcom (AVGO) isn't expected to make any remedy offer next week.

The report comes after Broadcom (AVGO) filed a request for its Vmware (VMW) deal with the European Commission last month and the agency set a Dec. 20 deal.

Dealreporter on Tuesday said that said Broadcom (AVGO) was attending a state of play meeting with the European Commission this week to discus the transaction.

The Federal Trade Commission's review of VMW/AVGO is said focused on conglomerate effects of the combination, according to a separate Dealreporter item on Tuesday. The FTC is looking at conglomerate effects as there don't appear to any horizontal overlaps besides Endpoint Security and there are no vertical concerns.

In May, Broadcom (AVGO) announced that it was acquiring VMware (VMW) for $61B in cash and stock.

Broadcom (AVGO) is scheduled to report Q3 results after the close on Thursday.

Comments

[dcpope58]

There seems to be some confusion around what the EU will assess. They will not look at whether the deal lines the pockets of current Broadcom shareholders. It’s my understanding that concerning the products/ services offered by the two companies…. the EU will will look at aspects of combining the two companies/services and the new entities’ ability to dominate the market (like a monopoly), lessen market competition and have the position to control market pricing. Has anyone else heard to the contrary?

[User 31614085]

shake down time...

[kvnbrnk]

ridiculous. It feels like this acquisition was announced years ago. This EC commission just now heard about it and planning to "do something"?

[qwerty11]

Good to see that the EU helps them to assess if the deal is feasible. They did quite some expensive acquisitions in the past and it will only help if a third party guides them with an independent opinion.

[bluescorpion0]

break the deal. companies should not be allowed to grow by ponzi scheme mergers!

[RWilliam]

@scorpionblue that’s a joke right?

The companies duty is increase shareholder value, period. Hock Tan has demonstrated multiple times his ability to grow shareholders value through acquisitions. Long a full AVGO position.

[Three Wood Capital]

Seems like a stretch at the FTC to go the conglomerate effects route. I think the EC can get by on that premise (Honeywell/GE comes to mind) but the FTC/DOJ haven't had much luck blocking vertical deals in court.

[BAHAMAS1]

The EXTORNIST european m'fers Planned this announcement right before earnings tonight.

Payoffs anyone ?

No real surprise here.

[qwerty11]

@BAHAMAS1 We can only thanks the European Union to assess this deal free of charge (so it will not affect their earnings in any way).