VMware (VMW) shares experienced a sharp decline, plummeting by 11.6% in early Tuesday trade. This significant drop is attributed to rising speculations surrounding China’s review of VMware’s monumental sale to Broadcom (AVGO). The stock market also witnessed a decline in AVGO shares by more than 3%.
China’s Regulatory Review
While the proposed remedy for the deal doesn’t seem to present any issues, the regulatory body in China might necessitate additional time to finalize its review. The prolonged review process is causing uncertainty in the market, leading to fluctuations in stock prices, including that of VMW and AVGO.
U.S. Government’s Decision Impacting the Deal
The deal’s future could be further complicated by a recent decision made by the U.S. government. The U.S. has imposed additional restrictions on the sale of Nvidia’s high-end chips, specifically designed for the Chinese market. This decision might have indirect implications on the VMware-Broadcom deal, adding another layer of complexity to the situation.
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