The Offer

On Friday, a week after Tan’s first meeting with Dell, Broadcom sent a confidential letter to “Messrs. Dell, Durban and Sagan” suggesting a purchase price of $142.50 per share, with shareholders selecting either cash or equivalent shares of Broadcom.

Additionally, Broadcom offered a board seat to VMware upon close of the deal, and a “go-shop” provision, but said it wanted to sign an agreement quickly, by May 26, the date of VMware’s next earnings call.

VMware’s board formed a transaction committee with Dell, Durban, Sagan and Karen E. Dykstra that got early glimpses of Broadcom’s first quarter performance, as well as its own, and, then on May 21, hatched a counter offer.

“The VMware board of directors then discussed a potential counterproposal to Broadcom, including an increase in headline price from $142.50 to $150 per share, an increase in exchange ratio (stock equivalent) from 0.242 to 0.2602 shares of Broadcom for one share of VMware, increasing the amount of Broadcom stock used from 50 percent of the financing to 60 percent, extending the timeline from 15 months to 18 months, and extending the “go-shop” provision from 35 days to 40 days,” an SEC filing stated.

Durban went to Tan that day to discuss the board’s proposal. Tan refused the price hike, telling Durban that $142.50 was Broadcom’s best and final offer. The “go-shop” provision was set at 40 days when the deal was announced, indicating VMware won some of the negotiations.

However, “Broadcom was unwilling to increase the maximum amount of stock consideration to be issued by Broadcom to VMware stockholders in the proposed transaction,” the filing stated.