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Key Takeaways
- Broadcom shares are in focus after a news report Saturday said that the chipmaker is nearing a deal to sell its end-user computing unit to private equity firm KKR in a $3.8 billion transaction.
- The deal would allow Broadcom to streamline its businesses after its $69 billion acquisition last November of cloud software maker VMware.
- Broadcom shares may find support during retracements around $1,160 from a horizontal trendline and the rising 50-day moving average.
- Monitor if the price can continue to make higher highs and higher lows, which confirms the uptrend remains in place.
Broadcom Inc.
Source: TradingView.com.
Broadcom (AVGO) shares are in focus after a news report on Saturday said that the chipmaker sits poised to offload its end-user computing (EUC) unit to private equity firm KKR (KKR) in a $3.8 billion deal that could be announced as early as Monday.
KKR successfully fended off other would-be buyers of the business, including rival alternative asset management firm EQT, people familiar with the negotiations said, according to a report from Reuters. The sale, if successful, would allow the company to streamline its businesses after its $69 billion acquisition last November of cloud software maker VMware.
Broadcom CEO Hock Tan first indicated in December plans to divest the EUC division, along with the company’s Carbon Black unit, instead aiming to focus on VMware’s core business of creating private and hybrid cloud environments.
KRR has ramped up its investment in the software sector over the past decade. In 2018, it purchased business software company BMC for $8.5 billion, followed three years later by acquiring information services technology provider Ensono in a $1.7 billion deal from fellow private equity firms Charlesbank Capital Partners and M/C Partners.
AVGO shares have trended consistently higher since the 50-day moving average crossed above the 200-day moving average back in January last year to generate a bullish golden cross pattern. The stock climbed to a record peak on Friday but staged an intraday reversal to close 0.7% lower at $1,296.37.
If the price undergoes a retracement, keep an eye on the $1,160 level, an area on the chart that may find a confluence of support from a horizontal trendline and the rising 50-day moving average. Conversely, if the stock continues its upward momentum, keep watching for the price to make higher highs and higher lows, which confirms the uptrend remains in place.
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