5 Merger Arbitrage Opportunities in 2023

2. Broadcom Inc (NASDAQ:AVGO)’s $61B Acquisition of VMware, Inc. (NYSE:VMW)

Consideration: $142.50 a share
Spread: 0%
Main Risk: Regulatory Pressure

Broadcom Inc (NASDAQ:AVGO) has sought to strengthen its footprint in the burgeoning semiconductor sector with a $61 billion acquisition of VMware, Inc. (NYSE:VMW). The deal reached last year is projected to close this year as it undergoes regulatory scrutiny in various jurisdictions. The European Commission has given the deal the green light after analyzing whether a merger of the two will harm the competitive balance in various key technology areas, including fibre, adapters, network interface cards and storage adapters.

Broadcom Inc (NASDAQ:AVGO)’s $61B offer translates to $142.50 a share. Given that VMware, Inc. (NYSE:VMW) is trading for about $155 a share, the merger arbitrage opportunity only exists in betting that Broadcom’s share price will increase on closing the deal.

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