News has emerged that the European Commission has given its approval for chip maker Broadcom Inc.’s $61 billion acquisition of cloud software company VMware Inc. This development has sparked speculation that Broadcom will secure a jumbo investment-grade bond to finance the deal.
Funding Considerations for Broadcom
In May 2022, when Broadcom announced the cash-and-stock deal, it stated that it had secured commitments for $32 billion in new debt financing from a consortium of banks. Now, the company needs to ascertain how it will fulfill these commitments, as reported by Bloomberg.
According to BondCliQ Media Solutions’ chart below, Broadcom currently carries approximately $41 billion in outstanding debt. Most of this debt matures after 2032, which implies that the company may choose to issue bonds with nearer-term maturities.
Broadening Geographic Scope
Broadcom has confirmed that regulatory clearance for the deal has been granted in Australia, Brazil, Canada, South Africa, and Taiwan. The company maintains its expectation of completing the acquisition within the current fiscal year.
In a noteworthy development, a federal judge recently ruled against the Federal Trade Commission’s attempt to halt Microsoft Corp.’s $69 billion acquisition of Activision Blizzard Inc. In her opinion, U.S. District Court Judge Jacqueline Scott Corley stated that the FTC did not sufficiently demonstrate how this particular vertical merger would significantly diminish competition.
This ruling deals a blow to the FTC, which raised concerns that Microsoft, with its Xbox gaming console, could withhold popular Activision Blizzard videogame franchises like “Call of Duty” and “Overwatch” from competing console platforms.
For more details on Microsoft’s involvement, click here.
Following these announcements, there is renewed optimism regarding tech M&A deals, which have been scarce due to concerns about regulatory resistance. Regulators overturned Nvidia’s attempt to acquire chip designer Arm from SoftBank in 2022, raising fears that the Broadcom-VMware deal could meet a similar fate.
Related: After Microsoft defeat, ‘toothless’ FTC needs to pick better battles if it wants to rein in Big Tech
