VMware stock is trading at 113… far off from the deal price @$140. Are markets less confident of this acquisition going through? Can it go Twitter way?
Any thoughts? Timeline?
5 replies (most recent on top)
If the deal doesn't go through, I wonder if Raghu will tell us that its a great opportunity for VMware to stand on its own two feet...again
As others have posted, it is not a full cash deal and it is half Broadcom stock. Broadcom trades under AVGO and you check that the price is hovering around 508$. This will mean every VMW stockholder will get half of their equivalent holdings in cash whereas the remaining VMW shares will be converted to the appropriate number of AVGO shares.
However you do have a point on the interim price before this happens, the deal is supposed to close at 140 however VMW stock right now is at 114. Until the FTC fully blesses this deal, there is risk involved and the street will not value this at 140. In the initial days of the deal if you remember the stock rose back to 136 and then fell from there. If you are into options and feel adventurous you can try playing calls closer to the deal close date ( Nov or Feb 2023).
Cash is only half of it, other half is Broadcom stock. VMWARE stock price will follow Broadcom stock movement
The deal will go through, but keep in mind, this deal is not a full cash deal, I a, no expert in these types of deals, but I have to believe some investors may not want to have their stock convert to Broadcom shares, as there is risk in that part of the deal. If it was each VM share paid out at the purchase price the stock would match the buyout price.
We all need to hope and pray this deal goes through, if it doesn’t, we are done. Just like Twitter forcing Elon to buy them, the outcome if that deal doesn’t happen is problematic.
Someone smarter than me though please feel free to correct my logic here.
I think the deal will still go through but it will take much longer than anticipated.