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Broadcom to acquire VMware for $61B

reuters.com

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Re: Broadcom to acquire VMware for $61B

#91

Post by phonon »

simonebrunozzi wrote: post #80

I don't understand the stock market. VMW at $50B market cap equates to ~$120 per share. The Broadcom acquisition is for ~20% more, and yet, the stock price is at $120, not... $145 or something. Can someone more financially literate (or with direct experience in the stock market) explain this discrepancy to me? (comment made at ~9:33am ET, stock market opened a few minutes ago)

"Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, VMware shareholders will elect to receive either $142.50 in cash or 0.2520 shares of Broadcom common stock for each VMware share. The shareholder election will be subject to proration, resulting in approximately 50% of VMware’s shares being exchanged for cash consideration and 50% being exchanged for Broadcom common stock. Based on the closing price of Broadcom common stock on May 25, 2022, the total $138.23 per-share consideration represents a 44% premium to the closing price of VMware common stock on May 20, 2022, the last trading day prior to media speculation regarding a potential transaction, and a 32% premium to VMware’s unaffected 30-day volume weighted average price (VWAP). Upon closing of the transaction, based on the outstanding shares of each company as of the date hereof, current Broadcom shareholders will own approximately 88% and current VMware shareholders will own approximately 12% of the combined company on a fully diluted basis. " [1]

1. The deal might not go through, or the terms might change.

2. You might not be able to get 100% cash for your shares.

[1] https://www.vmware.com/content/dam/digitalmarketing/vmware/e...

Re: Broadcom to acquire VMware for $61B

#92

Post by seanw444 »

voidfunc wrote: post #58
acd wrote: post #37

Ponders if it will payoff as an investment. Hyper visors are nowdays commodity. Workloads are moving from enterprise onsite datacenters to the cloud. Hyperscalers AWS,Google and Azure running the cloud are running work loads on Linux KVM kernel based virtual machines.

Azure uses Hyper-V under the hood not kvm. Its also not built on Linux.

Okay, yes, Microsoft Azure running Microsoft Windows virtualization isn't shocking. They have to dogfood, or they'll be laughed at hard.

Re: Broadcom to acquire VMware for $61B

#93

Post by sleepydog »

mkl wrote: post #34
SemanticStrengh wrote: post #5

If they invested instead a mere Billion into optimizing a fork of e.g. QEMU they would destroy VMware in performance.

At the cost of giving away their billion dollars of R&D to their competition - QEMU is GPL licensed.

It works both ways —- they get their competitors’ R&D too.

Plenty of companies seem to be OK with using GPL2-licensed Linux, why wouldn’t qemu be the same?

Re: Broadcom to acquire VMware for $61B

#94

Post by zerkten »

999900000999 wrote: post #72
SSLy wrote: post #4

Oh no https://www.reddit.com/r/cybersecurity/comments/uxucz4/if_vm...

This feels way too pessimistic, VMware got big before open source virtualization took off. I imagine someone could use docker instead of VMware in most cases, and if that's not possible then hire some people to make it so. Vendor lockin is a scary thing, the people who are really going to hurt here are mega super corps who are now going to have to pay out the nose. If you're a smaller company, you should be moving to…

It's not purely a case of vendor lock-in, but that shouldn't be downplayed too much. Virtualization is still very much applicable for the legacy applications which are still prevalent. New apps may run in containers, but it's not just a few big companies running ancient legacy software.

When you refer to smaller company and mention docker, or open source, it's only those that are tech startups, or close to the field with the skill to operate in this fashion. The majority of small and medium companies don't have the skills or resources to do this. Over time that changes, but it's completely unrealistic to think that they can get away quickly from VMware (even when their overworked IT person would like to.)

Re: Broadcom to acquire VMware for $61B

#95

Post by dodobirdlord »

simonebrunozzi wrote: post #80

I don't understand the stock market. VMW at $50B market cap equates to ~$120 per share. The Broadcom acquisition is for ~20% more, and yet, the stock price is at $120, not... $145 or something. Can someone more financially literate (or with direct experience in the stock market) explain this discrepancy to me? (comment made at ~9:33am ET, stock market opened a few minutes ago)

If the stock is trading at $120/share that means everyone who owns stock (and is paying attention and offering it for sale) won’t sell for less than $120. But that doesn’t mean all of them, or even most of them, would sell for $120. Many of them probably believe their stock should be worth more than $120 and expect the price to go up in the future. So if you want to buy out the whole company you have to pitch a price high enough that a majority of shareholders (or the board of directors as their fiduciary proxy) agree to sell at that price. This is basically guaranteed to be a substantially higher price than whatever the current market price is, because if the average shareholder didn’t expect the stock price to go up, why are they holding shares?

As the deal becomes increasingly likely to go through, the stock price will likely gradually shift up to match the deal price.

Re: Broadcom to acquire VMware for $61B

#96

Post by terra_ignota »

simonebrunozzi wrote: post #80

I don't understand the stock market. VMW at $50B market cap equates to ~$120 per share. The Broadcom acquisition is for ~20% more, and yet, the stock price is at $120, not... $145 or something. Can someone more financially literate (or with direct experience in the stock market) explain this discrepancy to me? (comment made at ~9:33am ET, stock market opened a few minutes ago)

Your instincts are right, it's just that the price jump happened on Monday when the talks were reported in the press over the weekend. It jumped from ~$95 on the Friday close to $115 on the open, ~20%.

Re: Broadcom to acquire VMware for $61B

#97

Post by pooper »

efficax wrote: post #79
formerly_proven wrote: post #3

Can we like... stop building these ginormous conglomerates? Thanks.

competition requires consolidation in order to acquire new lines of profit, it’s inevitable

> competition requires consolidation in order to acquire new lines of profit, it’s inevitable

It may be inevitable but I think I have a solid idea to at least check its explosive growth.

The CEO and the board (includes President) ought to be personally civil as well as criminally liable for any actions of the employees, contractors, or agents of the company if they cannot prove that the employees, contractors, or agents acted against company policy. Elimination of the "right to work" is a precondition to this proposal.

Re: Broadcom to acquire VMware for $61B

#98

Post by [deleted] »

metamet wrote: post #82
999900000999 wrote: post #72

Earlier quoted context omitted.

This feels way too pessimistic, VMware got big before open source virtualization took off. I imagine someone could use docker instead of VMware in most cases, and if that's not possible then hire some people to make it so. Vendor lockin is a scary thing, the people who are really going to hurt here are mega super corps who are now going to have to pay out the nose. If you're a smaller company, you should be moving to…

> I imagine someone could use docker instead of VMware in most cases, and if that's not possible then hire some people to make it so. It's been a few years since I've worked with bare metal, but doesn't Docker require a hypervisor for the containers? You could swap to KVM or Hyper-V, but transitioning an org's hypervisor on bare metal is a massive task any way you cut it.

[deleted]

Re: Broadcom to acquire VMware for $61B

#99

Post by yjftsjthsd-h »

AndrewStephens wrote: post #61
ReactiveJelly wrote: post #35

Earlier quoted context omitted.

If intellectual property (specifically software patents) were weakened, this would be less of a problem, right? Companies don't buy companies, they buy IP, as I understand it.

Maaaaaybe. I am not a fan of software patents but intellectual property laws are the only thing stopping Big Company A from just cloning Small Company B's product. At least now they have to go to the trouble of buying them. Of course, it goes both ways and laws often favor the strong against the weak. But it is not all one-sided.

Wasn't there a whole thing about big tech companies interviewing small companies as if to acquire them and then just cloning the product anyways?

Re: Broadcom to acquire VMware for $61B

#100

Post by TheRealDunkirk »

cruano wrote: post #23
TheRealDunkirk wrote: post #13

Earlier quoted context omitted.

Why wouldn't you just post to the article directly, and bypass the horrible Reddit web site for the redirect?

Because the reddit post was also made by the author ? And he's responding to the comments there too?

Fair enough.
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