Broadcom CEO's $40,000 Dinner Bet on Chinese Approval for $69 Billion Deal

29 Nov, 2023

Broadcom CEO's $40,000 Dinner Bet on Chinese Approval for $69 Billion Deal

Hock Tan, Broadcom's Chief Executive, made a hefty $40,000 investment to secure a seat at a dinner with Chinese leader Xi Jinping in San Francisco. This strategic move came as Broadcom awaited approval from China for its $69 billion bid to acquire enterprise-software developer VMware. Chinese regulators had delayed clearance for months, prompting Broadcom to extend the deal's completion date three times, with previous instances of Beijing impeding U.S. company mergers.

China's regulatory hesitance affected other deals too; Intel's $5 billion acquisition of Israeli firm Tower Semiconductor was abandoned in August after Chinese approval failed to materialize. Post the dinner with Xi Jinping, China granted approval for Broadcom's deal and gave the green light for Mastercard to issue yuan-denominated cards in the country.

Observers interpret these actions as efforts to appease American corporations growing cautious about conducting business in China. The incidents also underscore how companies can become instruments in the escalating geopolitical rivalry between Washington and Beijing. In October, China's antitrust regulator signaled readiness to approve Broadcom's deal, but Broadcom executives, sensing the involvement of China's Foreign Ministry, sought a meeting with Chinese Foreign Minister Wang Yi.

During the late October meeting, Tan, an ethnic Chinese businessman and American citizen, discussed the Broadcom-VMware deal with Wang Yi, who reiterated China's openness to foreign investment without divulging future actions. Broadcom and Mastercard declined to comment, while China's Foreign Ministry referred to the official statement approving the Broadcom deal released on Nov. 21.

Approvals for Mastercard and Broadcom are considered individual successes and need to be contextualized within the broader U.S.-China relationship, according to Eric Zheng, President of the American Chamber of Commerce in Shanghai. Uncertain ties between the two nations remain a significant concern for businesses operating in China.