Item 1.01 |
Entry into a Material Definitive Agreement. |
As previously announced, on May 26, 2022, Broadcom Inc., a Delaware corporation (the “Company” or “Broadcom”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VMware, Inc. (“VMware”), a Delaware corporation, Verona Holdco, Inc. a Delaware corporation and a direct wholly owned subsidiary of VMware (“Holdco”), Verona Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Holdco (“Merger Sub 1”), Barcelona Merger Sub 2, Inc., a Delaware corporation and a direct wholly owned subsidiary of the Company (“Merger Sub 2”), and Barcelona Merger Sub 3, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of the Company (“Merger Sub 3”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, (i) Merger Sub 1 will be merged with and into VMware (the “First Merger”), with VMware continuing as the surviving corporation in the First Merger (the “Surviving Company”) and becoming a wholly owned subsidiary of HoldCo; (ii) following the First Merger, the Surviving Company will be converted from a Delaware corporation into a Delaware limited liability company (the “Conversion”); (iii) following the Conversion, Merger Sub 2 will be merged with and into Holdco (the “Second Merger”), with Holdco continuing as the surviving corporation in the Second Merger (the “Holdco Surviving Company”) and becoming a wholly owned subsidiary of Broadcom; and (iv) following the Second Merger, the Holdco Surviving Company will be merged with and into Merger Sub 3 (the “Third Merger,” and together with the First Merger, the Conversion and the Second Merger, the “Transactions”), with Merger Sub 3 continuing as the surviving limited liability company and as a wholly owned subsidiary of Broadcom.
As a result of the Transactions, each share of Class A common stock, par value $0.01 per share, of VMware (“VMware Common Stock”) issued and outstanding immediately prior to the effective time of the Mergers will be indirectly converted into the right to receive, at the election of the holder of such share of VMware Common Stock, and subject to proration in accordance with the Merger Agreement as described below: (a) $142.50 per share in cash, without interest, or (b) 0.25200 shares of common stock, par value $0.001 per share, of Broadcom (“Broadcom Common Stock”). The shareholder election will be subject to a proration mechanism, such that the total number of shares of VMware Common Stock entitled to receive the Cash Consideration, and the total number of shares of VMware Common Stock entitled to receive the Stock Consideration, will, in each case, be equal to 50% of the aggregate number of shares of VMware Common Stock issued and outstanding immediately prior to the effective time of the Mergers.
Effective upon the effective time of the Second Merger, one member of the VMware board of directors, to be mutually agreed by VMware and Broadcom, will be added to Broadcom’s board of directors.
Each of VMware, Holdco and Merger Sub 1 has made customary representations, warranties and covenants in the Merger Agreement. Each of Broadcom, Merger Sub 2 and Merger Sub 3 also has made customary representations, warranties and covenants in the Merger Agreement.
Until 11:59 p.m. Pacific time on July 5, 2022, VMware and its subsidiaries and their respective representatives will have the right to solicit any acquisition proposal and any proposal, inquiry or offer that could reasonably be expected to lead to, result in or constitute an acquisition proposal, including providing information regarding VMware to any person pursuant to an acceptable confidentiality agreement, and engaging in discussions or negotiations with respect to such acquisition proposal. From and after 11:59 p.m. Pacific time on July 5, 2022, VMware must comply with customary non-solicitation restrictions. Subject to certain customary “fiduciary out” exceptions, the VMware board of directors is required to recommend that VMware’s stockholders adopt the Merger Agreement.
Consummation of the Transactions, which is expected to be in Broadcom’s fiscal year 2023, is subject to the satisfaction or waiver of customary closing conditions, including (i) adoption of the Merger Agreement by VMware stockholders, (ii) the expiration or termination of the waiting period under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and clearance under the antitrust laws of the European Union and certain other jurisdictions, (iii) the receipt by VMware of a tax opinion to the effect that (a) the First Merger and the Conversion, taken together, and (b) the Second Merger and the Third Merger, taken together, will each qualify for federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, (iv) the absence of certain orders or laws preventing consummation of the Transactions, (v) the effectiveness of the registration statement on Form S-4 to be filed by Broadcom with the U.S. Securities and Exchange Commission (the “SEC”) in connection with the Transactions and (vi) the authorization for listing on Nasdaq of the shares of Broadcom Common Stock to be issued in connection with the Second Merger. The obligation of each party to consummate the Transactions is also subject to other customary closing conditions, including, among others, the absence of a material adverse effect with respect