What happened
Shares of semiconductor company Broadcom (AVGO 3.84%) gained 2.4% through 12:15 p.m. ET after the company provided an update on the status of its bid to acquire VMware (VMW) Monday morning.
Specifically, Broadcom announced that it has received final approval from the United Kingdom's Competition and Markets Authority. This was the seventh country-level antimonopoly clearance Broadcom has secured. It has also received clearance from the European Union and foreign investment control clearance "in all necessary jurisdictions," said Broadcom.
So what
According to Broadcom, all systems are go for the company to complete its acquisition of VMware as planned on Oct. 30. But not so fast.
Broadcom has gotten clearance from the U.K. The U.S. doesn't object. Same with the European Union, Australia, Brazil, Canada, Israel, South Africa, and Taiwan. But what about China?
Just last week, after all, China scotched Intel's planned $5.4 billion buyout of Tower Semiconductor Manufacturing -- presumably as retaliation for the U.S. government's policy of restricting exports of advanced semiconductors to China. And last month, China imposed conditions on MaxLinear's plan to acquire Silicon Motion Technology. Yet here is U.S. semiconductor stock Broadcom, stuck awaiting antimonopoly clearance from China. Will it go through?
Now what
The old saw about counting chickens comes to mind. Based on the recent decisions of Chinese regulators, I'm not quite as optimistic as Broadcom seems to be about its being able to win clearance of its acquisition in China.
In fact, that may explain why investors are reacting to news of the positive U.K. decision with so little elation today. The fact of the matter is, it only takes one national regulator frowning on Broadcom's deal to bring the entire merger agreement crashing down. The U.K. wasn't that "one" -- but until we know how China will rule, there's still no guarantee this deal will happen.
