Broadcom Makes $130B Unsolicited Bid for Qualcomm

07 November, 2017, 01:24 | Author: Lester Mason
  • A sign is posted at a Qualcomm office on November 1 in San Jose California. – AFP

To acquire Qualcomm, the world's largest maker of mobile-phone chips, Broadcom would pay a 28 percent premium over the stock's closing price on November 2, before Bloomberg first reported talks of a deal.

Citing sources, Bloomberg claimed that the Qualcomm board is likely to advise shareholders to reject the deal, while also claiming that any potential deal could run into regulatory problems.

The tie-up would represent the largest technology acquisition ever.

Broadcom and Qualcomm are no strangers to acquisitions, with the pair in talks to complete multibillion-dollar deals.

"There is a long road here, while Broadcom is one of the most disciplined acquirers, we think in an unsolicited offer - rarely is the 1st offer the last one, suggesting there is an upside bias to Broadcom's math. Net/Net: We think this deal fits Broadcom's strategy and could be a material catalyst to enable earnings per share and free cash flow upside".

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Reuters reported that Broadcom had not contacted Qualcomm about the offer prior to Tan's letter. It is firm that its pool of patents remains a highly valuable asset and its work on defining 5G network roll-out deserves a larger price.

"Broadcom's proposal is compelling for stockholders and stakeholders in both companies".

Qualcomm is now trying to close its pending $38-billion acquisition of NXP Semiconductors, a leading supplier of chips for vehicles that is also expanding into self-driving technology, and it is believed that Broadcom is open to acquiring NXP. The company has gone so far with its Apple fight that it recently filed a lawsuit seeking to ban sales of the iPhone in China.

"We would not make this offer if we were not confident that our common global customers would embrace the proposed combination", Tan said in a statement. The combined company, now called Broadcom, is creating new headquarters in San Jose, California - a move it recently announced with Donald Trump.

Broadcom facility in Silicon Valley.

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