Bloomberg has reported that Broadcom Inc.’s $61 billion merger with software maker VMware Inc. is facing a list of conditions from Chinese regulators in order to gain approval. The conditions are related to the companies’ sales in the Chinese market, with a focus on ensuring that VMWare’s server software is compatible with local hardware. The Chinese state market regulator stated that compliance with these conditions is necessary for the deal to be approved, and they reserve the right to supervise and inspect the companies’ adherence to the restrictions.
The merger, which combines a US chipmaker and a cloud software company, has already received clearance from the EU, UK, South Korea, and Japan. However, approval from China is crucial and has caused delays in the deal’s closing, which was initially set for the end of last month. The agreement was set to expire on Nov. 26, and despite the uncertainty, both companies had expressed confidence in closing the deal.
Following the news, VMWare shares initially rose by 27% in premarket trading before declining by 3.4% as the New York exchanges opened. Meanwhile, Broadcom’s stock slipped by 2.9% in premarket trading after closing at $995.71.
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