Broadcom offers to buy Qualcomm in $130 billion deal

Broadcom offers to buy Qualcomm in $130 billion deal”

Broadcom, the US-based fabless semiconductor company has officially bid to acquire its competitor Qualcomm with a record offer of $130 billion in cash and stock (including $25 billion net debt). CEO Hock Tan week, saying the company is likely to relocate its headquarters from Singapore to the United States.

The Silicon Valley company, which is officially based in Singapore but last week announced plans to legally relocate to DE, said that its proposal valued Qualcomm at $70 per share, split between $60 per share in cash and $10 per share in Broadcom stock. Broadcom says its proposal is a 28 percent premium over the closing price of Qualcomm common stock on November 2, the last "unaffected" trading day for the companies. "Following the combination, Qualcomm will be best positioned to build on its legacy of innovation and invention". The company is expected to "strongly resist" Broadcom's offer, CNBC reported. Later, the company was acquired Avago Technologies a year ago, and is now being operated as a wholly owned subsidiary. Broadcom said its proposal stands whether Qualcomm's pending acquisition of NXP is consummated on the now disclosed terms of $110 per share or terminated.

"We believe the combination could create shareholder value through potential accretion, synergies, increased share with Apple and Samsung; in addition, Broadcom could potentially settle the licensing dispute with Apple in a more-timely manner than could Qualcomm, given Broadcom's strong relationship with Apple", Canaccord Genuity analysts wrote in a note to clients. Qualcomm had offered to acquire NXP Semiconductors for $47 billion, and it received the approval from USA antitrust regulators in April, 2017.

And SunTrust's William Stein compared Broadcom's M&A moves to "a game of chess", and raised his price target from $281 a share to $325 a share. "We believe these factors, coupled with our history of successful acquisitions and integrations, clearly demonstrate our commitment and ability to implement value-enhancing transactions and deliver robust results for stockholders, employees, customers and other stakeholders".

Broadcom expects that the transaction would be completed within 12 months, following the signing of a definitive agreement.

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