Broadcom Wants to Buy Out Qualcomm for $130 Billion

Laverne Mann
November 7, 2017

We refer investors to our November 3 note, written after Bloomberg and The Wall Street Journal surfaced rumors about the potential bid, but in short, we see a sound strategic rationale for such a deal, and the financial component is especially attractive for Broadcom because we value Qualcomm at $68 per share on a stand-alone basis.

Semiconductor vendor Broadcom is on the verge of making a $130bn (£99bn) bid for chip maker Qualcomm in what would be the largest technology takeover ever, according to reports.

Reuters reported that Broadcom had not contacted Qualcomm about the offer prior to Tan's letter. Qualcomm apparently isn't happy with the offer, with Bloomberg saying that Qualcomm thinks the deal "undervalues the company".

Since publication Broadcom and Qualcomm have confirmed the offer, with Broadcom disclosing that the bid of $70 a share is made up of $60 cash and $10 in Broadcom shares.

The bid comes as Broadcom plans to move its headquarters to the United States from Singapore.

The deal stands regardless of the results of Qualcomm's $110 per share bid for NXP Semiconductors, Broadcom said in a news release.

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

Broadcom also is waiting on regulatory approval to purchase San Jose's Brocade Communication Systems for $5.9 billion.

The Financial Times is reporting that Broadcom is planning to acquire NXP, as well as Qualcomm.

According to sources Qualcomm is not aware of the details of Broadcom's bid and the company has yet to make any comment.

Qualcomm shares, which traded over $70 as recent as December 2016, closed at $61.81 on Friday. Moreover, it would create a company with "massive market share" in the kind of chips that power Wi-Fi, location data and Bluetooth, necessary for the next generation of connected devices, said Stuart Carlaw, chief research officer at ABI Research.

Other reports by MaliBehiribAe

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