8-KMaterial AgreementsOther EventsExhibits & Filings

Broadcom Inc. 8-K Report, Material Agreement (May 26, 2022)

Filed May 26, 2022For Securities:AVGO

Summary

Broadcom Inc. has announced a significant definitive agreement to acquire VMware, Inc. in a multi-step transaction. This strategic move involves a combination of cash and stock, with VMware shareholders having the option to elect either $142.50 in cash or 0.25200 shares of Broadcom common stock per share of VMware common stock. Importantly, the total consideration will be split equally between cash and stock, meaning the actual mix received by shareholders will be subject to proration based on elections. The transaction is expected to close in Broadcom's fiscal year 2023, but is contingent upon customary closing conditions, including regulatory approvals (Hart-Scott-Rodino, EU antitrust) and adoption by VMware stockholders. Significant VMware shareholders, including Michael S. Dell and Silver Lake, have entered into voting agreements to support the merger, collectively representing approximately 50.2% of VMware's outstanding shares. Broadcom has also secured a commitment letter for a $32.0 billion senior unsecured bridge facility to finance the deal.

Key Highlights

  • 1Broadcom enters into a Merger Agreement to acquire VMware, Inc. through a series of mergers.
  • 2VMware shareholders will receive a mix of cash and Broadcom stock, with an option for election, subject to proration.
  • 3The per-share consideration offers a choice between $142.50 in cash or 0.25200 shares of Broadcom common stock.
  • 4Major VMware shareholders (Michael S. Dell and Silver Lake) have agreed to vote in favor of the merger.
  • 5The transaction is expected to close in Broadcom's fiscal year 2023, subject to regulatory and shareholder approvals.
  • 6Broadcom has committed financing for the acquisition, including a $32.0 billion bridge facility.

Frequently Asked Questions

The acquisition involves a multi-step merger process. Initially, a Broadcom subsidiary will merge with VMware. Following this, VMware will convert to a limited liability company, and then further mergers will occur, ultimately resulting in VMware becoming a wholly owned subsidiary of Broadcom.

VMware shareholders can elect to receive either $142.50 in cash per share or 0.25200 shares of Broadcom common stock per share. However, the total number of shares receiving cash versus stock will be capped at 50% each, meaning elections will be subject to proration to achieve this balance.

The transaction is subject to several conditions, including the adoption of the merger agreement by VMware stockholders, clearance under antitrust laws (such as the Hart-Scott-Rodino Act and EU antitrust regulations), and the effectiveness of Broadcom's Form S-4 registration statement. The deal is expected to close in Broadcom's fiscal year 2023.

Michael S. Dell and Silver Lake, who collectively hold approximately 50.2% of VMware's outstanding shares, have entered into voting agreements with Broadcom. They have agreed to vote their shares in favor of the merger agreement, which significantly increases the likelihood of shareholder approval.