Why Broadcom Stock Is Gaining Today
What happened
Broadcom (NASDAQ: AVGO) stock is seeing significant gains in Thursday's trading. The company's share price was up 3.6% as of 1:30 p.m. ET, according to data from S&P Global Market Intelligence.
Broadcom stock is gaining after reports emerged that China's regulatory body for governing potential antitrust issues was on track to approve Broadcom's buyout of VMWare. Broadcom is on track to acquire VMWare (NYSE: VMW) for roughly $61 billion, and it seems possible that the deal will close this month or next month. VMWare stock is up 4.1% as of this writing.
So what
Reports from Dealreporter and other outlets hit today that China is on track to approve Broadcom's big acquisition of VMWare, which specializes in virtualization software. Through VMWare's technologies, customers are able to run apps and replicate or augment the functions of hardware through software-based virtual machines.
Broadcom stock may also be getting a boost thanks to comments from Jim Cramer, the host of the Mad Money television show on CNBC. Following reports that the big buyout is on track to be approved, Cramer said that completion of the deal would give Broadcom stock significant room to run.
Now what
Broadcom is primarily a designer of networking and connectivity semiconductors and equipment. It became the largest player in its corner of the semiconductor industry and one of the largest overall chip companies by revenue following a merger with Avago in 2015. In subsequent years, the company has been making a big push into the software space through acquisitions.
According to recent reports on the matter, China is likely to give the go-ahead on the VMWare without requiring any major changes. That's good news for Broadcom because it will allow the company to integrate the virtualization leader into its business and take advantage of synergies across its existing hardware and software units.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Broadcom and VMware. The Motley Fool has a disclosure policy.
