Broadcom Offers $103 Billion for Qualcomm in Chip Megadeal

by Linda Olson November 7, 2017, 0:13
Broadcom Offers $103 Billion for Qualcomm in Chip Megadeal

Qualcomm and Broadcom have patent portfolios in wireless communications that are largely adjacent to each other, and antitrust concerns over any proposed deal could be muted because the companies have few areas of overlap beyond Wi-Fi solutions for wireless routers, Bluetooth drivers and some RF semiconductors. In part this might be inspired by Qualcomm's pending release of the Centriq family of processors seeing as how Broadcom cancelled their ARM based server chip development earlier this year.

Broadcom made an unsolicited, $103 billion offer for rival chipmaker Qualcomm, the tech industry's largest attempted takeover that is destined to come under intense regulatory scrutiny. As of Monday, shares of Qualcomm are still about 8% lower than the $70 per share offer price. Qualcomm apparently isn't happy with the offer, with Bloomberg saying that Qualcomm thinks the deal "undervalues the company".

Reuters reported that Broadcom had not contacted Qualcomm about the offer prior to Tan's letter. NXP is one of the largest makers of chips for vehicles and expanding into self-driving technology, and Broadcom also is open to acquiring NXP, according to one of the sources.

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Qualcomm shares, which traded over $70 as recent as December 2016, closed at $61.81 on Friday.

Broadcom is looking to complete its $5.5 billion purchase of Brocade Communications Systems Inc (BRCD.O) while Qualcomm is in the process of closing its deal for NXP.

The proposed deal comes at a time when there has been significant consolidation within the chipset market, driven by greater demand for smartphones and connected devices. "Our proposal provides Qualcomm stockholders with a substantial and immediate premium in cash for their shares, as well as the opportunity to participate in the upside potential of the combined company", said Hock Tan, president and chief executive officer of Broadcom.


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