Broadcom comes back with its ‘best and final’ offer for ginormous Qualcomm acquisition
After categorically rejecting Broadcom’s initial unsolicited acquisition proposal, fighting hard against a hostile takeover on “undervalued” terms, Qualcomm may have to ultimately agree to the largest technology deal in history.
If reports from a little while back were correct as to the “fair” price of a prospective pact pursued by the San Diego-based semiconductor giant, Broadcom Limited’s latest, “best and final” offer might just be too good to turn down.
The “leading designer, developer and global supplier of a broad range of digital and analog semiconductor connectivity solutions” seems to have truly thought of everything this time around in its attempt to completely dominate the chipmaking world.
Qualcomm stockholders are now looking at a whopping $82 reward per share, up from $70 as listed in Broadcom’s first bid back in early November. The aggregate $82 still includes “only” $60 in cash, with the remainder providing “greater opportunity” for stockholders to take advantage of “transaction benefits” in more substantial Broadcom shares.
All in all, this is now a deal worth over $121 billion, up from $105 billion, Qualcomm debt notwithstanding. In comparison, the largest tech acquisition to date saw Dell acquire EMC a couple of years ago for a cash-and-stock total of $67 billion.
Because Broadcom doesn’t want regulatory anxiety involved in Qualcomm’s decision-making process, it’s also ready to pay a so-called “ticking fee” if the deal is not “consummated” within a year of reaching a definitive agreement. This will increase the “cash consideration payable to Qualcomm stockholders”, and even better, in the “unlikely event” regulatory approvals are never obtained, Broadcom is prepared to cough up a “reverse termination fee” in an amount “appropriate for a transaction of this size.”
As crazy as it sounds, financial analysts believe the “appropriate” amount could reach as much as $10 billion if Qualcomm says yes to Broadcom’s “best and final offer”, and then the transaction is torpedoed by regulatory agencies.