Broadcom makes formal $130 billion offer for acquisition of arch-rival Qualcomm
The global semiconductor industry is obviously an extremely competitive and volatile one, deeply influenced by recent changes in consumer electronics markets. Earlier this very year, Samsung managed to capitalize on its mobile strengths and interrupt Intel’s reign as the world’s largest chipmaker, a position the chaebol may be able to hold onto for a little while longer.
Another important move saw Toshiba give up its last remaining profitable business, that of memory chips, following a months-long bidding war ultimately won by Apple-backed SK Hynix.
Meanwhile, Qualcomm, which is still the undisputed leader of smartphone SoCs and cellular modems, continues to wait for regulatory approval in its 2016-proposed $47 billion bid for NXP Semiconductors.
Of course, the San Diego-based company’s most pressing concern has become an increasingly ugly legal war with Apple, which may have very unpleasant long-term repercussions on one of Qualcomm’s top divisions.
Enter arch-rival Broadcom and an unsolicited but “compelling for stockholders and stakeholders in both companies” $130 billion acquisition proposal. The soon-to-be-relocated semiconductor giant which merged with Avago early last year offers $70 in cash and stock per QCOM share, which it says represents a 28 percent “premium over the closing price of Qualcomm common stock on November 2, 2017.”
It’s also 33 percent more than Qualcomm’s speculation-unaffected “30-day volume-weighted average price”, which sounds like a pretty solid deal. After all, it’d be easily the biggest corporate acquisition in tech history, at nearly double the value of Dell’s $67 billion EMC takeover.
But rumor is Qualcomm will have none of this “complementary transaction” talk aiming to “position the combined company as a global communications leader with an impressive portfolio of technologies and products.” That’s because the proposal comes at an opportune time for Broadcom to undervalue the business it seeks to purchase, according to people close to Qualcomm’s top execs. It remains to be seen if shareholders will agree the company is worth more than the potentially record-breaking $130 billion sum.