On November 21, 2023, China’s State Administration for Market Regulation（“SAMR”） announced the conditional clearance of the acquisition of VMware, Inc.(“VMware”) by Broadcom Inc. (“Broadcom”).
Broadcom is a U.S.based and listed semiconductor company. It acquired all of the shares of VMware, a U.S.based and listed virtualization software company, with a transaction amount of USD 61 billion, making it the largest acquisition in the semiconductor sector worldwide. JunHe acted as Vmware’s agent and provided a full range of legal services for the PRC merger control filing of the transaction. The project took more than 14 months.
Founded in 1998 in the U.S. and listed on the New York Stock Exchange, VMware is a software production and technological services company. Its core product is virtualization software which is used primarily in data centers and cloud computing. VMware is a top provider of cross-cloud services for a wide range of applications, enabling digital innovation along with enterprise-level control.
The main challenges and difficulties of this project were as follows:
(1) The transaction involved the semiconductor and virtualization software markets, which have a high degree of specialization and a complex industry structure. This resulted in multiple information requests from SAMR regarding VMware’s products, economic analyses, negotiations and on-site visits.
(2) SAMR considered that the parties to the transaction had market control and dominance in the non-public cloud virtualization software and fiber channel adapter markets respectively, thus it was concerned about the impact of the transaction on market competition. This required multiple rounds of negotiations and communication regarding ways to reduce such impact.
(3) The transaction involved the acquisition of a U.S.-based company in the semiconductor industry, so the review period was long and complex. JunHe assisted the client in coordinating the overall project timetable while facing the difficult and uncertain regulatory approval process.
JunHe provided professional, meticulous, efficient and practical legal services throughout the PRC merger control filing, and was highly recognized and appreciated by the client.
The leading partner of the project was Yung Yung Janet Hui. Partner GONG, Mingfang was also primarily responsible for the specific work.. Counsel Wang Dongxin also provided great support during the project.