Beijing considers delaying approval of $69 billion Broadcom-VMware deal – FT

In this photo taken on March 6, 2023, a smartphone is placed on top of a computer motherboard with the Broadcom logo displayed.

Oct 19 (Reuters) – Beijing is considering stalling U.S. chipmaker Broadcom Inc’s ( AVGO.O ) $69 billion takeover of cloud computing company VMware Inc ( VMW.N ), the Financial Times reported on Thursday, citing three sources familiar with the matter. .

China’s state market regulator has not signed off on the deal, the report added, and is likely to delay approving the deal after US President Joe Biden’s administration imposed tighter chip controls on Tuesday. postpone.

VMware shares fell 7.5 percent in premarket trading on concerns that China would delay approving the deal.

VMWare and Broadcom did not immediately respond to Reuters requests for comment. SAMR China was not immediately available for comment.

Chinese merger and acquisition approvals for American companies now require further consultations with the State Department and the State Council, the report added, citing two people familiar with the negotiations.

Broadcom announced in May 2022 that it would buy VMware in a deal consisting of $61 billion in stock and the rest in debt, the chip maker’s biggest and boldest bid yet to diversify its business into enterprise software.

The US chipmaker has previously said it still expects the deal to close this fiscal year.

The company said in July that Broadcom had received legal incorporation approval in Australia, Brazil, Canada, the European Union, South Africa and Taiwan, and foreign investment control approval in all required jurisdictions.

The deal was previously reviewed by the UK’s Competition and Markets Authority (CMA), which approved the deal after an in-depth review.

The chipmaker also secured EU approval of an antitrust agreement this year after offering solutions to help rival Marvell Technology ( MRVL.O ) so the companies could compete on the same level.

China closely monitors deals involving chip makers. Earlier this year, Intel Corp ( INTC.O ) scrapped its $5.4 billion deal to buy Israeli contract chipmaker Tower Semiconductor Ltd ( TSEM.TA ) after their merger agreement expired without regulatory approval from China.

Garsimran Kaur and Zaheer Kechwala report in Bengaluru; Edited by Nividita Bhattacharjee

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