Broadcom tenders offering valued at $130 billion for Apple legal foe Qualcomm

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After a weekend of speculation, Broadcom has tendered what will likely be a hostile takeover fight for Qualcomm, in an offering valued at $130 billion including debt.




Broadcom's offer stipulates that shareholders would be given $60 payment for each share owned, and $10 in Broadcom shares. Sources familiar with the matter told Reuters on Monday that Qualcomm is likely to refuse the deal, as investors were hoping for up to $80 per share setting up a board member election showdown in December.

Any deal will be subject to rounds of regulatory approvals from many countries. The combined entity would be the third largest chip maker.

Broadcom noted that Bank of America Merrill Lynch, Citi, Deutsche Bank, JP Morgan and Morgan Stanley are "highly confident" that the necessary debt financing for the proposed transaction can be accomplished. Silver Lake Partners is also committed to $5 billion to help fund the deal.

"We are well advised and know what our options are, and we have not eliminated any of those options," said Broadcom Chief Executive Hock Tan. "We have a very strong desire to work with Qualcomm to reach a mutually beneficial deal."

Tan also claims that Broadcom absorbing Qualcomm would lead to a "very constructive" environment for Apple and would allow for "resetting relationships."

Broadcom has around $5.25 billion of cash and cash equivalent on hand. Qualcomm reported $35.03 billion of the same on Sept. 24.

The buy offer represents a premium of 27.6 percent to Qualcomm's closing price of $54.84 on Thursday, before rumors started circulating about a possible deal. At present, Qualcomm's stock has risen to $62.70 per share.

Broadcom is known for its Wi-Fi modules and has been a regular Apple supplier, including the iPhone X. Buying Qualcomm would immediately thrust it into a leading position in cellular modems, as well as mobile processors.

Qualcomm is closing a $38 billion deal for NXP Semiconductors, with Broadcom in the midst of a $5.5 billion takeover of Brocade Communications Systems. The deal will allegedly happen regardless if Qualcomm closes the deal for NXP or not.

Comments

  • Reply 1 of 7
    SoliSoli Posts: 8,292member
    Apple usually has no such interest in such deals, but what could it mean for the industry if Apple acquired Qualcomm?
    watto_cobra
  • Reply 2 of 7
    Sounds like it's time for the Rockstar group to make another purchase.
    cali
  • Reply 3 of 7
    jkichlinejkichline Posts: 1,302member
    Wait a couple of months, Broadcom. I bet you can pick them up for less...
    jony0
  • Reply 4 of 7
    Soli said:
    Apple usually has no such interest in such deals, but what could it mean for the industry if Apple acquired Qualcomm?

    The purchase of Qualcomm by Apple wouldn’t be approved.  Apple has no need for most of Qualcomm’s assets, except IP, so they wouldn’t pursue them.

    Qualcomm is close to losing all their Apple business to Intel.  So, getting bought out by Broadcom would be a good thing...

    It’s possible Apple instigated Broadcom’s offer for Qualcomm.  Qualcomm is the larger company, so Broadcom’s offer is a bit predatory. 

    Eventually, we’ll probably see most of the wireless tech developed in-house by Apple, with them just licensing the necessary IP.

    Everything is up in the air... Intel could make out like a bandit or end up with nothing.
    Rayz2016
  • Reply 5 of 7
    jbdragonjbdragon Posts: 1,870member
    Soli said:
    Apple usually has no such interest in such deals, but what could it mean for the industry if Apple acquired Qualcomm?
    They would be screwed!!! While Apple would be forced to licence anything having to do with Cell Service under FRAND terms. Updating CPU/GPU's for company's to use? Why? That would effect most all high end Android phones made. Samsung, they could just go back with using their own CPU/GPU. Google, Motorola, HTC and others, screwed!!!! Other company's that were making chips in this area have pretty much gone away as Qualcomm has taken over most of the market from low end to high end. About what is left is Chinese only phones using other CPU's. I just don't see Apple acquiring this company. To many others would be against this big time.
    watto_cobra
  • Reply 6 of 7
    Smart move by Broadcom to pounce on Qualcomm. 
  • Reply 7 of 7
    jbdragon said:
    Soli said:
    Apple usually has no such interest in such deals, but what could it mean for the industry if Apple acquired Qualcomm?
    They would be screwed!!! While Apple would be forced to licence anything having to do with Cell Service under FRAND terms. Updating CPU/GPU's for company's to use? Why? That would effect most all high end Android phones made. Samsung, they could just go back with using their own CPU/GPU. Google, Motorola, HTC and others, screwed!!!! Other company's that were making chips in this area have pretty much gone away as Qualcomm has taken over most of the market from low end to high end. About what is left is Chinese only phones using other CPU's. I just don't see Apple acquiring this company. To many others would be against this big time.
    So if Apple did team with Microsoft, Google moved the Cell Service IP in to a Patent pool like Rockstar did with LTE patents. They could then make the remaining company back in to smaller competitive companies which would either drive innovation, cost saving or both.
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