Merger Arbitrage Mondays – Broadcom To Acquire VMware For $69 Billion

  • May 30, 2022

Merger activity increased significantly last week with seven new deals announced and six deals completed. Three of the seven new deals announced were potential deals in the works.

One of the largest tech deals in M&A history was announced last week. Chipmaker Broadcom entered into an agreement to acquire VMware for $69 billion in a cash or stock deal, which includes $8 billion of VMware’s net debt, that will be assumed by Broadcom. VMWare was spun off from Dell Technologies (DELL) on November 1, 2021. VMware was founded in the year 1998 and later acquired by EMC in January 2004 and eventually ended up with Dell after EMC was acquired by Dell in a massive $67 billion deal in 2016.

We added VMware as a potential deal in the works on May 22, 2022, when Bloomberg reported that Broadcom  (AVGO) was in talks to acquire VMware. VMW’s price after this announcement was $119.43. When I first heard rumors of the deal, I dismissed it because of both the size of the deal and the likely regulatory challenges a deal with Broadcom would encounter. Broadcom’s highly acquisitive CEO Hock Tan was blocked from acquiring Qualcomm (QCOM) in a hostile $117 billion takeover when President Trump prohibited the deal on national security grounds. Broadcom’s acquisition of VMware will be reviewed by either the FTC or the DOJ, the Committee on Foreign Investment in the United States  (CFIUS) and multiple international regulatory agencies including China’s State Administration for Market Regulation (SAMR).

According to the terms of the deal, VMware shareholders will be able to 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. The deal also includes a 40 day “go-shop” provision during which VMware can solicit alternative proposals.

Michael Dell and Silver Lake, who own 40.2% and 10% of VMW respectively, agreed to vote in favor of the transaction. According to the press release, both parties have agreed to a $1.5 billion termination fee, but VMware will only have to pay $750 million if it finds a superior offer by the July 5 deadline. The deal is expected to be completed in Broadcom’s fiscal year 2023. After the closing of the deal, the Broadcom Software Group will rebrand and operate as VMware.

Broadcom and VMware

Source: Broadcom VMware presentation

You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.

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Deals In The Works

There were two new deals announced in the Deals in the Works section last week.

SPAC Arbitrage

There were four new SPAC combinations announced last week. You can find the new SPAC IPO announcements in our SPACs tool here.

  1. On May 25, 2022, privately held Southland Holdings and Legato Merger Corp. II (LGTO) jointly announced that they have signed a definitive agreement for a business combination transaction.
  2. On May 26, 2022, ECARX Holdings has entered into a merger agreement with COVA Acquisition (COVA) and upon completion of the transaction expects to be listed on Nasdaq under ticker symbol “ECX”.
  3. On May 26, 2922, Auto Services Group Limited entered into a definitive merger agreement for a business combination with Goldenbridge Acquisition Limited (GBRG).
  4. On May 27, 2022, Aesther Healthcare Acquisition (AEHA) announced that it has entered into an Agreement and Plan of Merger with United Gear & Assembly.

Weekly Spread Changes:

The table below shows weekly spread changes between May 20 and May 29, 2022.

Company Quote
Last Week
Spread Change
BKI68.68Intercontinental Exchange, Inc. (ICE)102.723.76%18.12%5.64%Special Conditions
SAVE20.5Frontier Group Holdings, Inc. (ULCC)10.4557.93%3.88%4.05%Cash Plus Stock
PTRS9.18OceanFirst Financial Corp. (OCFC)19.87-2.34%-4.35%2.01%All Stock
EXTN6.08Enerflex Ltd. (EFX.TO)7.924.53%3.46%1.07%All Stock
UMPQ17.77Columbia Banking System, Inc. (COLB)30.351.76%1.40%0.36%All Stock
TSEM48.25Intel Corporation (INTC)44.559.84%16.00%-6.16%All Cash
BLCT1.34Multelements Limited (N/A)19.40%25.98%-6.58%All Cash
TWTR40.17Elon Musk (N/A)34.93%41.55%-6.62%All Cash
TEN16.96Apollo Global Management, Inc. (APO)60.3217.92%25.00%-7.08%All Cash
MGI10.01Madison Dearborn Partners, LLC (N/A)9.89%17.27%-7.38%All Cash

Deal Statistics:

Total Number of Deals Closed in 202277
Total Number of Deals Not Completed in 20225
Total Number of Pending Deals
Cash Deals56
Stock Deals13
Stock & Cash Deals9
Special Conditions7
Total Number of Pending Deals85
Aggregate Deal Consideration$915.53 billion

New Deals:

  1. The acquisition of Entasis Therapeutics Holdings (ETTX) by Innoviva (INVA) for $87.32 million or $2.20 per share in cash.
  2. The acquisition of CynergisTek (CTEK) by Clearwater Compliance for $13.9 million or $1.25 per share in cash.
  3. The acquisition of PCSB Financial Corporation (PCSB) by Brookline Bancorp (BRKL) for a closing value of $313 million in a cash or stock deal. Under the terms of the merger agreement, stockholders of PCSB will receive, for each share of PCSB, at the holder’s election, either $22.00 in cash consideration or 1.3284 shares of Brookline common stock for each share of PCSB common stock, subject to allocation procedures to ensure 60% of the outstanding shares of PCSB common stock will be converted to Brookline common stock.
  4. The acquisition of Covetrus (CVET) by Clayton, Dubilier & Rice and TPG Capital for $4 billion or $21 per share in cash. We added CVET as a potential deal to the Deals in the Works section on February 3, 2022,  and the price after the news of the potential deal came out was $19.71.
  5. The acquisition of Höegh LNG Partners (HMLP) by Höegh LNG Holdings for $167.6 million or $9.25 per share in cash. We added HMLP as a potential deal to the Deals in the Works section on December 6, 2021,  and the price after the news of the potential deal came out was $4.26.
  6. The acquisition of StoneMor (STON) by Axar Capital Management for $927.7 million or $3.50 per share in cash.
  7. The acquisition of VMware (VMW) by Broadcom (AVGO) for $69 billion in a cash or stock deal. The closing value includes $8 billion of VMware’s net debt, that will be assumed by Broadcom. Under the terms of the agreement, 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. We added VMW as a potential deal to the Deals in the Works section on May 22, 2022,  and the price after the news of the potential deal came out was $119.43.

Deal Updates:

  1. On May 23, 2022, Fulton Financial Corporation (FULT) announced that both the Federal Reserve Bank of Philadelphia and the Pennsylvania Department of Banking and Securities have approved the respective applications by Fulton to acquire Prudential Bancorp (PBIP).
  2. On May 23, 2022, MoneyGram International (MGI) announced that stockholders overwhelmingly approved the transaction with affiliates of funds managed by Madison Dearborn Partners.
  3. On May 23, 2022, Spirit Airlines (SAVE) announced that it will host a conference call for analysts to discuss the Spirit Board of Directors’ decision to reject the unsolicited tender offer from JetBlue Airways Corporation (JBLU) and its recommendation that stockholders vote for the merger with Frontier Airlines (ULCC).
  4. On May 24, 2022, Allegiance Bancshares (ABTX) and CBTX, Inc. (CBTX) announced that their respective shareholders had approved the agreement for the merger of equals of Allegiance and CBTX.
  5. On May 25, 2022, Elon Musk revised the financing plan for his proposed $44 billion purchase of Twitter (TWTR) by eliminating the $6.25 billion margin loan and replacing it with an equity commitment, which will bring the stock-based portion of the deal to $33.5 billion.
  6. On May 25, 2022, Whiting Petroleum Corporation (WLL) announced that the special meeting of stockholders will be on June 28, 2022.
  7. On May 25, 2022, the HSR Waiting Period applicable to the consummation of the Merger between Datto Holding (MSP) and Kaseya expired.
  8. On May 25, 2022, PS Business Parks (PSBannounced the expiration of the “go-shop” period set forth in the previously announced definitive merger agreement with affiliates of Blackstone Real Estate (BX).
  9. On May 26, 2022, Meritor (MTOR) announced that its shareholders have voted to approve the previously announced pending acquisition by Cummins (CMI) at a special meeting.

Closed Deals:

  1. The acquisition of Zynga (ZNGA) by Take-Two Interactive Software (TTWO) on May 23, 2022. It took 133 days for this deal to be completed.
  2. The acquisition of Antares Pharma (ATRS) by Halozyme Therapeutics (HALO) on May 24, 2022. It took 41 days for this deal to be completed.
  3. The acquisition of IntriCon Corporation (IIN) by Altaris Capital Partners on May 24, 2022. It took 85 days for this deal to be completed.
  4. The acquisition of American National Group (ANAT) by Brookfield Asset Management Reinsurance Partners (BAMR) on May 25, 2022. It took 289 days for this deal to be completed.
  5. The acquisition of Vidler Water Resources (VWTR) by D.R. Horton (DHI) on May 25, 2022. It took 41 days for this deal to be completed.
  6. The acquisition of Ortho Clinical Diagnostics Holdings (OCDX) by Quidel Corporation (QDEL) on May 27, 2022. It took 155 days for this deal to be completed.

Top 10 deals with largest spreads:

Please do your own due diligence on deals with large spreads. Some of these large spreads might be related to regulatory issues or because of the way the deal is structured. We classify some of these deals as “special situation” deals in our merger arbitrage tool and provide additional details to help with the analysis. There may be unique situations related to special dividends, spinoffs, proration, etc. that need to be accounted for when looking at these spreads.

TWTR04/25/2022Elon Musk (N/A)$54.20$40.1712/31/202234.93%59.02%
BKI05/04/2022Intercontinental Exchange, Inc. (ICE)$85.00$68.6806/30/202323.76%21.85%
ATVI01/18/2022Microsoft Corporation (MSFT)$95.00$78.206/30/202321.48%19.75%
SIMO05/05/2022MaxLinear, Inc. (MXL)$108.95$90.506/30/202320.39%18.74%
BLCT04/30/2022Multelements Limited (N/A)$1.60$1.3412/31/202219.40%32.79%
TEN02/23/2022Apollo Global Management, Inc. (APO)$20.00$16.9612/31/202217.92%30.29%
CHNG01/06/2021UnitedHealth Group Incorporated (UNH)$27.75$23.812/31/202216.60%28.05%
SJR03/15/2021Rogers Communications Inc. (RCI)$32.40$28.306/30/202214.49%165.25%
BRG12/20/2021Blackstone Real Estate (N/A)$29.85$26.4906/30/202212.68%144.68%
MBII03/16/2022Bioceres Crop Solutions Corp. (BIOX)$1.27$1.1309/30/202212.45%36.66%

List of all pending deals:

The list of all pending deals is only available to InsideArbitrage Premium and Plus members.

Target VolumeEstimated
Closing Date
+TWTR4/25/22Elon Musk (N/A)All Cash$44 B$54.20$40.1714,539,16912/31/2234.93%59.29%
+TMX12/14/21Rentokil Initial plc (RTOKY)Special Conditions$6.7 B$55.00$44.22448,5539/30/2224.38%72.34%
+BKI5/04/22Intercontinental Exchange, Inc. (ICE)Special Conditions$16 B$85.00$68.681,007,7506/30/2323.76%21.90%
+ATVI1/18/22Microsoft Corporation (MSFT)All Cash$68.7 B$95.00$78.23,353,2856/30/2321.48%19.80%
+SIMO5/05/22MaxLinear, Inc. (MXL)Cash Plus Stock$8 B$108.95$90.5733,2616/30/2320.39%18.79%
+BLCT4/30/22Multelements Limited (N/A)All Cash$60 M$1.60$1.34142,49912/31/2219.40%32.94%
+TEN2/23/22Apollo Global Management, Inc. (APO)All Cash$7.1 B$20.00$16.96673,15212/31/2217.92%30.43%
+CHNG1/06/21UnitedHealth Group Incorporated (UNH)All Cash$13.28 B$27.75$23.82,357,53312/31/2216.60%28.18%
+SJR3/15/21Rogers Communications Inc. (RCI)Special Conditions$26 B$32.40$28.3316,9066/30/2214.49%170.58%
+BRG12/20/21Blackstone Real Estate (N/A)Special Conditions$3.6 B$29.85$26.49166,1366/30/2212.68%149.34%
+MBII3/16/22Bioceres Crop Solutions Corp. (BIOX)All Stock$236 M$1.27$1.13428,6449/30/2212.45%36.95%
+HTA2/28/22Healthcare Realty Trust Incorporated (HR)Cash Plus Stock$10.74 B$33.30$29.683,497,3709/30/2212.20%36.19%
+WLL3/07/22Oasis Petroleum Inc. (OAS)Cash Plus Stock$2.82 B$99.67$88.86520,09212/31/2212.16%20.65%
+ATC7/01/21MKS Instruments, Inc. (MKSI)Cash Plus Stock$6.5 B$22.96$20.51894,5759/30/2211.93%35.40%
+VMW5/26/22Broadcom Inc. (AVGO)Special Conditions$69 B$142.50$129.265,826,0664/30/2310.24%11.16%
+MGI2/15/22Madison Dearborn Partners, LLC (N/A)All Cash$1.8 B$11.00$10.01536,87412/31/229.89%16.79%
+TGNA2/22/22Standard General L.P. (N/A)Special Conditions$8.6 B$24.00$21.84673,01312/31/229.89%16.79%
+TSEM2/15/22Intel Corporation (INTC)All Cash$5.4 B$53.00$48.25569,9642/15/239.84%13.77%
+HLG5/09/22Hailiang Education International Limited (N/A)All Cash$368.89 M$14.31$13.081,3199/30/229.40%27.91%
+CDR3/02/22Wheeler Real Estate Investment Trust, Inc. (WHLR)All Cash$291.3 M$29.00$26.71110,0266/30/228.57%100.95%
+VG11/22/21Ericsson (ERIC)All Cash$6.2 B$21.00$19.375,713,8706/30/228.42%99.08%
+NLSN3/29/22Evergreen Coast Capital Corporation (N/A)All Cash$16 B$28.00$25.831,549,92412/31/228.40%14.26%
+FHN2/28/22The Toronto-Dominion Bank (TD)Special Conditions$13.4 B$25.00$23.12,602,91211/27/228.23%16.59%
+SAVE2/07/22Frontier Group Holdings, Inc. (ULCC)Cash Plus Stock$6.6 B$22.13$20.53,343,39512/31/227.93%13.47%
+GTYH4/29/22GI Partners (N/A)All Cash$383.29 M$6.30$5.891,056,6609/30/226.96%20.66%
+MILE11/08/21Lemonade (LMND)All Stock$201.47 M$1.21$1.13612,9636/30/226.92%81.50%
+PNM10/21/20Avangrid, Inc. (AGR)All Cash$8.05 B$50.30$47.5219,7306/30/225.89%69.41%
+CTEK5/23/22Clearwater Compliance LLC (N/A)All Cash$13.9 M$1.25$1.19304,9639/30/225.04%14.96%
+EXTN1/24/22Enerflex Ltd. (EFX.TO)All Stock$735 M$6.37$6.08170,8659/30/224.73%14.03%
+ROG11/02/21DuPont de Nemours, Inc. (DD)All Cash$5.2 B$277.00$265.35104,4536/30/224.39%51.69%
+FBC4/26/21New York Community Bancorp, Inc. (NYCB)All Stock$2.6 B$39.79$38.15233,81010/31/224.30%10.19%
+SJI2/24/22Infrastructure Investments Fund (N/A)All Cash$8.1 B$36.00$34.6564,10112/31/224.05%6.87%
+MNDT3/08/22Alphabet Inc. (GOOG)All Cash$5.4 B$23.00$22.121,490,94612/31/223.98%6.75%
+BHVN5/10/22Pfizer Inc. (PFE)Special Conditions$11.6 B$148.50$143.371,709,1443/31/233.58%4.28%
+RNDB3/28/22Hometown Financial Group, Inc. (N/A)All Cash$146.5 M$27.00$26.12,67212/31/223.45%5.85%
+SAIL4/11/22Thoma Bravo (N/A)All Cash$6.9 B$65.25$63.172,077,67012/31/223.29%5.59%
+CCMP12/15/21Entegris, Inc. (ENTG)Cash Plus Stock$6.5 B$183.85$178.11164,41012/31/223.23%5.48%
+NPTN11/04/21Lumentum Holdings Inc. (LITE)All Cash$745.24 M$16.00$15.52965,34312/31/223.09%5.25%
+CTXS1/31/22Vista Equity Partners and Elliott Investment Management LP (N/A)All Cash$16.5 B$104.00$100.95620,0546/30/223.02%35.57%
+GCP12/06/21Saint-Gobain (N/A)All Cash$2.3 B$32.00$31.08372,71012/31/222.96%5.03%
+TUFN4/06/22Turn/River Capital (N/A)All Cash$570 M$13.00$12.65484,7876/30/222.77%32.58%
+SREV5/09/22Concentrix Corporation (CNXC)All Cash$164.49 M$1.50$1.4659,18012/31/222.74%4.65%
+BKEP4/22/22Ergon, Inc. (N/A)All Cash$199.72 M$4.65$4.53184,1266/30/222.65%31.19%
+COHR3/25/21II-VI Incorporated (IIVI)Cash Plus Stock$6.84 B$276.49$269.58161,5025/31/222.56%935.96%
+NSR5/02/22Sandstorm Gold Ltd. (SAND)All Stock$585.29 M$8.06$7.8612,47512/31/222.53%4.29%
+HMLP5/25/22Höegh LNG Holdings Ltd. (N/A)All Cash$167.6 M$9.25$9.031,470,44512/31/222.44%4.14%
+NTUS4/18/22ArchiMed (N/A)All Cash$1.2 B$33.50$32.83308,4509/30/222.04%6.06%
+LHCG3/28/22Optum (N/A)All Cash$6.2 B$170.00$166.98213,50412/31/221.81%3.07%
+SUMR3/16/22Kids2, Inc. (N/A)All Cash$97.44 M$12.00$11.792,4136/30/221.78%20.97%
+UMPQ10/12/21Columbia Banking System, Inc. (COLB)All Stock$4.5 B$18.08$17.772,142,4926/30/221.76%20.71%
+STON5/25/22Axar Capital Management, LP (N/A)All Cash$927.7 M$3.50$3.44853,0669/30/221.74%5.18%
+Y3/21/22Berkshire Hathaway (BRK.A)All Cash$11.6 B$848.02$834.00118,38412/31/221.68%2.85%
+PBIP3/02/22Fulton Financial Corporation (FULT)Cash Plus Stock$142.1 M$16.27$16.010337,6699/30/221.64%4.87%
+WBT7/14/21Ali Holding S.r.l. (N/A)All Cash$4.8 B$24.00$23.641,168,1636/30/221.52%17.93%
+SAFM8/09/21Cargill and Continental Grain Company (N/A)All Cash$4.49 B$203.00$2001,201,3226/30/221.50%17.66%
+SWCH5/11/22DigitalBridge Group, Inc. (DBRG)All Cash$11 B$34.25$33.772,040,99412/31/221.42%2.41%
+TREC5/11/22Balmoral Funds, LLC (N/A)All Cash$247 M$9.81$9.683,339,8739/30/221.34%3.99%
+PCOM5/09/22Plusgrade Parent L.P. (N/A)All Cash$385 M$25.00$24.67324,5777/15/221.34%10.61%
+MN4/01/22Callodine (N/A)All Cash$137.1 M$12.85$12.7173,6939/30/221.18%3.50%
+MSP4/11/22Kaseya (N/A)All Cash$6.2 B$35.50$35.091,170,24612/31/221.17%1.98%
+CVET5/25/22Clayton, Dubilier & Rice and TPG Capital (N/A)All Cash$4 B$21.00$20.762,539,89912/31/221.16%1.96%
+ACC4/19/22Blackstone (BX)All Cash$12.8 B$65.47$64.851,761,5259/30/220.96%2.84%
+MTOR2/22/22Cummins Inc. (CMI)All Cash$3.7 B$36.50$36.161,125,20112/31/220.94%1.60%
+CDK4/07/22Brookfield Business Partners (N/A)All Cash$8.3 B$54.87$54.461,076,6919/30/220.75%2.23%
+HMTV5/09/22Gato Investments LP (N/A)All Cash$658.07 M$7.00$6.95266,5289/30/220.72%2.13%
+ETTX5/23/22Innoviva, Inc. (INVA)All Cash$87.32 M$2.20$2.185116,6979/30/220.69%2.04%
+MANT5/16/22The Carlyle Group Inc. (CG)All Cash$4.2 B$96.00$95.4482,16112/31/220.63%1.07%
+TVTY4/05/22Stone Point Capital (N/A)All Cash$2 B$32.50$32.31780,2179/30/220.59%1.75%
+CNR3/07/22Clayton, Dubilier & Rice (N/A)All Cash$5.8 B$24.65$24.521,549,9229/30/220.53%1.57%
+POLY3/28/22HP Inc. (HPQ)All Cash$3.3 B$40.00$39.81261,78912/31/220.48%0.81%
+RTLR5/16/22Diamondback Energy, Inc. (FANG)All Stock$2.36 B$17.25$17.17525,9609/30/220.47%1.39%
+PLAN3/20/22Thoma Bravo (N/A)All Cash$10.7 B$66.00$65.72,908,7926/30/220.46%5.38%
+TSC10/20/21Raymond James Financial, Inc. (RJF)Cash Plus Stock$1.1 B$30.80$30.66118,1966/30/220.45%5.28%
+SRRA4/13/22GlaxoSmithKline plc (GSK)All Cash$1.1 B$55.00$54.78152,4399/30/220.40%1.19%
+NSEC1/26/22VR Insurance Holdings, Inc. (N/A)All Cash$41.4 M$16.35$16.285946/30/220.40%4.70%
+CERN12/20/21Oracle Corporation (ORCL)All Cash$28.4 B$95.00$94.682,644,50312/31/220.34%0.57%
+REGI2/28/22Chevron Corporation (CVX)All Cash$2.75 B$61.50$61.33632,01112/31/220.28%0.47%
+APTS2/16/22Blackstone Real Estate Income Trust, Inc. (N/A)All Cash$5.8 B$25.00$24.94925,9196/30/220.24%2.83%
+CMPI4/19/22Regeneron Pharmaceuticals, Inc. (REGN)All Cash$250 M$10.50$10.559,9876/30/220.00%0.00%
+PSB4/25/22Blackstone (BX)All Cash$7.6 B$187.50$187.61197,6659/30/22-0.06%-0.17%
+ABTX11/10/21CBTX, Inc. (CBTX)All Stock$1.5 B$40.30$40.543,8106/30/22-0.50%-5.91%
+PTRS11/04/21OceanFirst Financial Corp. (OCFC)All Stock$186 M$8.97$9.182,2346/30/22-2.34%-27.53%
+PCSB5/24/22Brookline Bancorp, Inc. (BRKL)All Stock$313 M$19.30$19.9164,46812/31/22-3.01%-5.10%
+NP3/28/22Schweitzer-Mauduit International, Inc. (SWM)All Stock$1.18 B$37.26$38.9136,39112/31/22-4.23%-7.18%
+EMCF3/24/22Farmers National Banc Corp. (FMNB)All Stock$105 M$33.33$35.8951,10812/31/22-7.16%-12.15%
+RDBX5/11/22Chicken Soup for the Soul Entertainment, Inc. (CSSE)All Stock$182.9 M$0.59$7.7124,409,82412/31/22-92.39%-156.86%


Spreads compressed last week as overall sentiment turned more optimistic and indices rebounded. We also saw several deals close faster than anticipated with both Antares Pharma and Vidler Water Resources closing in just 41 days. Vidler started out with a negative spread as investors held out hope for a higher offer. For the second week in a row, no SPAC IPOs were filed.

Disclaimer: I have long positions in Biohaven Pharmaceutical (BHVN), Twitter (TWTR), First Horizon (FHN), Tower Semiconductor (TSEM), Healthcare Trust of America (HTA), TEGNA (TGNA) and Bluerock Residential Growth REIT (BRG). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.