Broadcom makes $105 billion offer for chipmaker Qualcomm

Broadcom makes $105 billion offer for chipmaker Qualcomm

Broadcom is making an unsolicited, $130 billion offer for rival chipmaker Qualcomm, the largest deal ever in the tech industry that will face intense regulatory scrutiny.

It's not a done deal, however.

Perhaps the most important new news on the bid is that Qualcomm is expected to reject this deal as it undervalues the company.

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.

Broadcom said its offer stood no matter if Qualcomm completes its purchase of NXP. While the deal might be massively accretive to Broadcom, we also expect this management team to be disciplined, so while we might see modest raises from here, we don't foresee a bidding war. "We would not make this offer if we were not confident that our common global customers would embrace the proposed combination", said Tan in a press statement.

More news: Change your batteries when you change your clock

The Financial Times is reporting that Broadcom is planning to acquire NXP, as well as Qualcomm. "Further, we believe Qualcomm and Broadcom are uniquely positioned for reaccelerating revenue and earnings growth as the market transitions to 5G". "Given the leverage required for the deal, there is potential Broadcom may spin-off or sell the [mobile chip] segment, which could lower the leverage required". "It would value Qualcomm's equity at roughly $103bn".

According to CNBC, Broadcom brought the offer to Qualcomm privately more than a year ago but was rebuffed.

There are now 27 buys, 2 holds and no sells on Broadcom with an average 12-month price target of $291.

And a premium of 33 per cent on Qualcomm's "unaffected 30-day volume-weighted average price".

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