Stocks: I'm Avoiding the Broadcom/VM Ware Merger
Posted: Thu Sep 07, 2023 4:58 pmI'm avoiding the Broadcom (Ticker: AVGO) and VM Ware (Ticker: VMW) merger. For those who follow the stock market, here is a little more detail as to why...
Owners of VMW stock will get roughly half of their money in cash at $142.50 a share and the other roughly half in the form of .252 shares AVGO stock for each 1 share of VMW.
BIG PROBLEM WITH DEAL: Potentially, there is a very long wait for the deal to be completed. It is supposed to be complete in Broadcom's fiscal year 2023, but that doesn't START til 11/1/23. So this deal might not close until 10/31/24.
ANALYSIS (ASSUME YOU ARE BUYING 100 VMW TO PLAY THE DEAL) A/O 9/6/23 (W) CLOSE:
VMW: Closed at $166.16
AVGO: Closed at $872.27
100 VMW costs $16,616.00 plus possible commission at some brokers
Cash for 50 shares of VMW is $7,125.00 ($142.50 x 50)
Stock for the other 50 shares of is worth $10,990.60 (a/o 9/6/23 close)
Theoretical total received is $18,115.60, a 9.0% profit.
NOTES:
The media first speculated about this deal a good while back, last year in fact. 5/20/22 was the last day before the speculation. VMW was $95.71 and spiked that first day of speculation to $119.43 a share. Now it is $166.16. So it is up very sharply from before the news was reported, yet you could still have to wait almost another 14 months for the deal to be consummated. That is too long to tie up my money with no guarantee of any profit whatsoever.
Also, we are in a seasonally weak time of year- September-October is normally the worst 2 month stretch of the year.
From the beginning of media speculation (just after 5/20/22) until the last day this deal could occur (10/31/24) is OVER 29 MONTHS. That is too long for me to have money tied up with no guarantee whatsoever of a profit. When I said 9.0% above, that is a THEORETICAL profit based on the price of AVGO stock on 9/6/23. AVGO could go down sharply and you'd be losing money.
There have been many other deals much better than this one. I pass!
Owners of VMW stock will get roughly half of their money in cash at $142.50 a share and the other roughly half in the form of .252 shares AVGO stock for each 1 share of VMW.
BIG PROBLEM WITH DEAL: Potentially, there is a very long wait for the deal to be completed. It is supposed to be complete in Broadcom's fiscal year 2023, but that doesn't START til 11/1/23. So this deal might not close until 10/31/24.
ANALYSIS (ASSUME YOU ARE BUYING 100 VMW TO PLAY THE DEAL) A/O 9/6/23 (W) CLOSE:
VMW: Closed at $166.16
AVGO: Closed at $872.27
100 VMW costs $16,616.00 plus possible commission at some brokers
Cash for 50 shares of VMW is $7,125.00 ($142.50 x 50)
Stock for the other 50 shares of is worth $10,990.60 (a/o 9/6/23 close)
Theoretical total received is $18,115.60, a 9.0% profit.
NOTES:
The media first speculated about this deal a good while back, last year in fact. 5/20/22 was the last day before the speculation. VMW was $95.71 and spiked that first day of speculation to $119.43 a share. Now it is $166.16. So it is up very sharply from before the news was reported, yet you could still have to wait almost another 14 months for the deal to be consummated. That is too long to tie up my money with no guarantee of any profit whatsoever.
Also, we are in a seasonally weak time of year- September-October is normally the worst 2 month stretch of the year.
From the beginning of media speculation (just after 5/20/22) until the last day this deal could occur (10/31/24) is OVER 29 MONTHS. That is too long for me to have money tied up with no guarantee whatsoever of a profit. When I said 9.0% above, that is a THEORETICAL profit based on the price of AVGO stock on 9/6/23. AVGO could go down sharply and you'd be losing money.
There have been many other deals much better than this one. I pass!