Broadcom and Qualcomm could merge in biggest tech deal in history

Posted Nov 6, 2017 by James Walker
Chipmaker Broadcom has announced a proposal to purchase rival Qualcomm for approximately $130bn. Qualcomm is considering the offer but believes the sum undervalues the company. If it goes ahead, the deal would be the biggest ever in the tech industry.
Broadcom could buy Qualcomm for $130bn
Broadcom could buy Qualcomm for $130bn
After a few days of rumours, Broadcom confirmed its takeover bid for Qualcomm today. It said it would pay $70 per share in cash, valuing the firm at $130 billion. Qualcomm shareholders would receive $60 in cash and $10 per share in Broadcom shares if the deal is approved.
Semiconductor giant Broadcom has been complementing and competing with Qualcomm for years. It builds mobile communications chips used inside smartphones and other kinds of device. Qualcomm is best known as a producer of the low-power ARM processors inside most mobile products, including some of the world's most successful Android phones.
Merging the two would create one of the biggest tech companies on the planet. The resulting firm would incorporate two of the largest chipmakers in the business, creating a formidable market force and allowing Broadcom and Qualcomm to extend their outreach. The merger could particularly impact Intel's future growth as it tries to diversify out of PC silicon and extend its footprint in mobile.
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"This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products," said Broadcom. "We would not make this offer if we were not confident that our common global customers would embrace the proposed combination. With greater scale and broader product diversification, the combined company will be positioned to deliver more advanced semiconductor solutions for our global customers and drive enhanced stockholder value."
Qualcomm's now assessing the potential acquisition as it works out how to proceed. In statements today, shareholders appeared to be sceptical of the proposal. Reuters reports Broadcom's offer has been interpreted by Qualcomm as an undervaluation with $70 per share viewed as "insufficient."
Broadcom said it's obtained unanimous approval for the merger from its Board of Directors. It's ready for "immediate" discussions with Qualcomm and said the transaction could be completed within 12 months of the signing of a definitive agreement. BofA Merrill Lynch, Citi, Deutsche Bank, J. P. Morgan and Morgan Stanley have said they're "highly confident" they can secure debt financing to enable the acquisition.