Vmware Stock Is Trading Higher Monday - What's Going On?

Vmware, Inc VMW stock is trading higher Monday after the Competition and Markets Authority (CMA) cleared Broadcom Inc's AVGO $69 billion purchase of VMware following an in-depth Phase 2 investigation.

Broadcom, an international tech giant, specializes in producing hardware components crucial for computer servers, while VMware offers software solutions and services that enhance server performance.

The U.K.'s CMA recently investigated Broadcom's intent to acquire VMware.

Upon concluding its preliminary Phase 1 probe, the CMA flagged potential competition issues, which led to a more exhaustive Phase 2 inquiry.

 An autonomous panel delved deeper, considering fresh evidence and input from various stakeholders. 

Their preliminary finding was that the anticipated acquisition wouldn't significantly dent competition within the U.K.'s server hardware component market.

The committee's primary concern was whether the unified entity might sabotage the functionality of Broadcom's competitors by ensuring their products were incompatible with VMware's server virtualization software. Nevertheless, it determined that any conceivable monetary gains from such a strategy wouldn't compensate for the potential losses in clientele.

They evaluated if Broadcom's competitors would need to disclose trade secrets to VMware, ensuring the harmonious operation of their hardware with VMware's software. 

Post-acquisition, the anxiety revolved around Broadcom potentially accessing this privileged data. However, the panel's consensus was that such data sharing usually occurs too late in the product development cycle to offer any substantial commercial advantage to Broadcom.

Following public feedback on these provisional results, the panel concluded that the acquisition would not infringe upon competitive integrity, giving the green light for its execution in the U.K.

Last week, Broadcom secured up to $28.39 billion in new debt commitments to acquire Vmware. 

The term facilities consist of a $10.69 billion term loan, a $7 billion term loan, and another $10.69 billion term loan.

The deal is still waiting for the approval of the U.S. Federal Trade Commission.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Price Action: VMW shares traded higher by 5.33% at $163.12 in the premarket on the last check Monday.