One of the largest mergers in the tech industry has taken another step further. The $69 Billion worth deal between semiconductor manufacturer Broadcom Inc. (NASDAQ: AVGO) and cloud computing company VMware Inc. (NYSE: VMW) got conditional approval from the European executive body. Following the news, VMW stock price rose up to 10% while AVGO rose 4% to date.
The American chipmaker company has been “highly acquisitive” since it went public in 2009. Earlier it bought CA Technologies for $18.9 Billion and the enterprise security business of Symantec for $10.7 Billion, according to Financial Times, a leading financial daily.
The VMware acquisition came in the wake of Broadcom’s intentions to diversify its operations to cloud computing operations along with regular chip manufacturing. The $69 Billion deal for acquiring VMare consists of $61 Billion in cash and stock while the rest is $8 Billion in debt.
The regulatory concerns with the Broadcom and VMware deal were somewhat similar to Microsoft and Activision Blizzard deal: a threat to rivals’ competition and price rise. Along with the European Commission, the merger got legal clearance in Australia, Brazil, Canada, South Africa, and Taiwan. The deal is still in a regulatory deadlock in the United States, United Kingdom, and China.
VMware Stock Price Movement
For more than a year, VMware stock price was broadly in a consolidating phase without any significant downward or upward moves. The recent push, in addition to the previous highs in recent past months made VMW stock attain a 52-week high at $158 recently.
Currently, VMware stock is trading at $156 following the slight decline of 0.60% in the last intraday session. VMW price is up by over 25% since the start of this year while increasing more than 40% year after year.
VMW stock saw a gap in November 2021 dropping from $151 to around $126. Since then, it has tried to fill the gap but succeeded only recently. Given the past price movements, $136 is acting as a strong support for VMware stock price, while the immediate support stays at $140. If the price goes beyond the price level, $120 is likely to be the next stop.
The price started gaining momentum since the last earnings release in June 2023 despite a negative surprise in revenue and EPS. The current price movement is likely to push prices over $168 and $171.
However, since VMware’s stock price was overstretched and moved far above its 50-day EMA, a short-term retracement might be waiting down the road. If the price continues its rally to $168, it would have gained up to 30% since June 1, 2023. If the strong support would help, VMW could further rally to $183.
