Broadcom offers to buy mobile chipmaker Qualcomm
10 November, 2017
Communications chipmaker Broadcom offered last Monday to buy smartphone chip supplier Qualcomm for $103bn in cash and stock, or $70 per share, in the biggest technology acquisition ever, news wires reported. A tie-up, if agreed, would combine two of the largest makers of wireless communications chips for mobile phones and raise the stakes for Intel, which has been diversifying into smartphone technology from its stronghold in computers.
Broadcom's offer is at a premium of 27.6% to Qualcomm's closing price of $54.84 last Thursday, a day before media reports of a potential deal pushed up the company's shares, Reuters reported. Qualcomm shareholders would get $60 in cash and $10 per share in Broadcom shares. Including debt, Broadcom's bid values the transaction at $130bn.
Qualcomm is trying to close its $38bn acquisition of NXP Semiconductors, one of the largest makers of chips for vehicles and expanding into self-driving technology. Broadcom said its proposal stands irrespective of whether Qualcomm's acquisition of NXP goes through or not. Qualcomm shares, which traded over $70 in December 2016, closed at $61.81 last Friday.
Experts believe Broadcom would encourage Qualcomm to complete its NXP acquisition as it has extensive distribution channels, scale and exposure to the fastest growing segments in automotive, where Broadcom is under-penetrated. Broadcom said BofA Merrill Lynch, Citi, Deutsche Bank, JP Morgan and Morgan Stanley have advised that they are highly confident that they will be able to arrange the necessary debt financing for the proposed transaction.