In a turn of events, chipmaker Broadcom (NASDAQ:AVGO)'s anticipated $75 billion acquisition of cloud computing group VMware (NYSE:VMW), which was expected to close today, has been delayed, according to a company press release. The delay comes despite earlier assurances from a VMware spokesperson to Barron's that the deal was on track. Despite the postponement, both companies saw their shares rise in premarket trading, with Broadcom's increasing by 1.6% and VMware's by 1.3%.
The merger now awaits regulatory approval from China amidst ongoing U.S.-China tech tensions. However, the company has already secured all necessary global legal clearances, including foreign investment control. There are no American legal barriers to the deal, and it is expected to close "soon" and definitely before the expiration of their merger agreement.
Investor sentiment remains positive despite these developments. This optimism is reflected in the premarket trading increases for both companies' shares. The delay contradicts earlier assurances that the deal was on track but does not appear to have dampened investor confidence.
InvestingPro Insights
In light of the ongoing developments, it's worth noting some key insights from InvestingPro. VMware, the company in question, has been highlighted for its high earnings quality, with free cash flow exceeding net income, and yields a high return on invested capital, according to InvestingPro Tips. However, a declining trend in earnings per share is also noted.
InvestingPro's real-time data reveals that VMware has a market capitalization of $60.41 billion and a P/E ratio of 42.83. As of Q2 2024, the company's revenue was reported at $13.61 billion, with a modest growth rate of 3.56%. The gross profit for the same period stood at $11.07 billion, indicating impressive gross profit margins.
For more tips and real-time data metrics, consider exploring InvestingPro's offerings. There are 15 more tips available for VMware on InvestingPro, and a wealth of data metrics to help you make informed investment decisions. You can access these insights through InvestingPro's subscription plans.
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