News that the European Commission has approved chip maker Broadcom Inc.’s $61 billion acquisition of cloud software company VMware Inc.
VMW,
has sparked speculation that Broadcom will issue a jumbo investment-grade bond to fund the deal.
Broadcom
AVGO,
said in May of 2022 when it announced the cash-and-stock deal that it had commitments from a consortium of banks for $32 billion in new, fully committed debt financing.
Now the company will need to figure out how to fund those commitments, as Bloomberg reported on Wednesday.
As the following chart from BondCliQ Media Solutions shows, Broadcom currently has about $41 billion of outstanding debt. Most of it comes due after 2032, meaning the company could opt to issue bonds with nearer-term maturities.
Broadcom says it now has clearance for the deal to go through in Australia, Brazil, Canada, South Africa, and Taiwan. The company said it still expects to close the deal in its current fiscal year, although it must also receive the backing of the U.S. regulator.
The news comes a day after a federal judge ruled against a Federal Trade Commission halt of Microsoft Corp.’s
MSFT,
$69 billion acquisition of Activision Blizzard Inc.
ATVI,
The FTC did not show “this particular vertical merger in this specific industry may substantially lessen competition,” said U.S. District Court Judge Jacqueline Scott Corley in her opinion.
The news is a blow to the FTC which was concerned that Microsoft, with its Xbox gaming console, could withhold hit Activision Blizzard videogame franchises such as “Call of Duty” and “Overwatch” from competing console platforms.
For more, see: Microsoft to work with U.K. regulators after U.S. judge clears path to Activision Blizzard acquisition
Related: After Microsoft defeat, ‘toothless’ FTC needs to pick better battles if it wants to rein in Big Tech
But the two announcements have raised hopes that tech M&A deals may re-emerge after a drought caused partly by concerns about regulatory pushback.
Nvidia’s
NVDA,
attempt to acquire chip designer Arm from SoftBank
9984,
was overturned by regulators in 2022 and there were concerns the Broadcom-VMware deal would also be blocked.
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