Qualcomm is reviewing the “unsolicited” offer
Other than to say it has received Broadcom’s “unsolicited” 12-figure acquisition offer, and will review with its financial and legal advisors, “Qualcomm will have no further comment until its board of directors has completed its review.”
Broadcom is a silicon company that focuses on wired and wireless communications and enterprise and industrial data storage. Today the company made public its $103 billion offer to acquire rival Qualcomm. The deal is based on $60 per share in cash and $10 per share of Broadcom shares, which adds up to a 28% premium over the Nov. 2 closing price of Qualcomm’s common stock.
Broadcom CEO Hock Tan issued the following statement: “Broadcom’s proposal is compelling for stockholders and stakeholders in both companies. Our proposal provides Qualcomm stockholders with a substantial and immediate premium in cash for their shares, as well as the opportunity to participate in the upside potential of the combined company. This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products. 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.
“We have great respect for the company founded 32 years ago by Irwin Jacobs, Andrew Viterbi and their colleagues, and the revolutionary technologies they developed. Following the combination, Qualcomm will be best positioned to build on its legacy of innovation and invention. Given the common strengths of our businesses and our shared heritage of, and continued focus on, technology innovation, we are confident we can quickly realize the benefits of this compelling transaction for all stakeholders. Importantly, we believe that Qualcomm and Broadcom employees will benefit from substantial opportunities for growth and development as part of a larger company.”
If a combination is realized, the combined company would be the third largest chipmaker in the world behind Samsung and Intel. The silicon industry has been rife with consolidation–Softbank bought ARM for $31 billion and Intel bought Altera for $16.7 billion. Currently Qualcomm is trying to buy NXP for $39 billion.
To the NXP point, Broadcom said the deal “stands whether Qualcomm’s pending acquisition of NXP Semiconductors…is consummated on the currently disclosed terms of $110 per NXP share or the transaction is terminated.” In addition to the NXP deal, Qualcomm is locked in a multi-faced legal battle with Apple that includes allegations that the iPhone maker shared proprietary information with rival Intel, as well as disagreements over licensing fees and even a bid by Qualcomm to halt iPhone sales in the U.S. and China.
ABI Research Chief Research Officer Stuart Carlaw said in a note, “The Qualcomm shareholders are likely to be split with many viewing this opportunity as a solution to the worsening relations with Apple, whom Broadcom has a good relationship with. The potential merger raises significant questions surrounding the difficult takeover of NXP by Qualcomm and much is still to be discerned regarding the value of the Qualcomm patent holdings and its associated lucrative high-margin revenue stream.”
Patrick Moorhead of Moor Insights & Strategy told the Financial Times, “Broadcom needs LTE and 5G capability that they don’t have today. That’s what this come down to. What comes with it, though, is a ton of complexity.”
If the deal goes through, it would mark the largest tech acquisition in history. The current record holder is Dell’s $67 billion buy of EMC.