Broadcom offers to buy Qualcomm in $130 billion deal

Todd Singleton
November 7, 2017

Broadcom is offering a combination cash-and-stock deal of $70 per share. Reports suggest that Broadcom would not go over Qualcomm's offer of $110 per share to acquire NXP, so it may add urgency to NXP investors to close the deal after all. We note that Broadcom's bid is independent of Qualcomm's success in closing its bid for NXP.

Broadcom has reportedly made an unsolicited offer to buy Qualcomm in a deal valued at $130 billion, which, if it succeeds, would be the largest acquisition in tech history.

It is likely that Qualcomm will reject the bid, as it believes that its value is far below what the company is worth.

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

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"Broadcom's proposal is compelling for stockholders and stakeholders in both companies". In part this might be inspired by Qualcomm's pending release of the Centriq family of processors seeing as how Broadcom cancelled their ARM based server chip development earlier this year.

Qualcomm has a (long) pending acquisition, of chipmaker NXP Semiconductors NV, in the works - and Broadcom notes that its offer is not dependent on whether or not Qualcomm manages to close with NXP on the now disclosed terms (it's offering ~$39BN for the Netherlands-based chipmaker which has a focus on car-related applications and also security-based identification).

According to sources Qualcomm is not aware of the details of Broadcom's bid and the company has yet to make any comment. The forward price-to-earnings ratio for Broadcom recently stood at 14.6, slightly above its 13.5 average. 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.

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