Broadcom Officially Extends Offer to Acquire Qualcomm for $105 Billion
Over the weekend, we started seeing reports about the possibility of Broadcom acquiring Qualcomm for over $100 billion. The deal was reported to allow Qualcomm to completely merge with Broadcom, or simply become a subsidiary of the company. Now, more details about the acquisition have come to light as Broadcom has officially offered to acquire Qualcomm for $105 Billion. If the deal goes through, it would make Broadcom the third largest chipmaker in the world.
This is an interesting offer for both parties as there is so much at stake here. Qualcomm has been dealing with antitrust allegations all around the world and they’re also currently involved in multiple lawsuits against Apple. Not only that, but they have also been trying to acquire NXP Semiconductors for $47 billion. The deal is supposed to be complete by the end of this year, but Broadcom says their offer still stands even if the NXP Semiconductor acquisition falls through.
For Broadcom, the deal would make them the third largest chipmaker in the entire world. The company has been moving up the ladder and received a big boost back in 2015 when it was acquired by Avago for $37 billion. At that time it was the biggest tech deal in history so you can understand why them offering $105 billion for Qualcomm is such big news. After the acquisition, Avago then renamed themselves to Broadcom to keep the brand going and are looking to grow even more with this new offer.
At the time the offer was made, Qualcomm’s stock was around $62 per share and this offer from Broadcom values them at $70 per share in cash and stock. This brings the total up to $130 billion, but is on a pro forma basis, including $25 billion of net debt.
Under the current proposal, the $70.00 per share to be received by Qualcomm stockholders would consist of $60.00 in cash and $10.00 per share in Broadcom shares. This proposal represents a 28% premium over the closing price of Qualcomm common stock on November 2, 2017, the last unaffected trading day prior to media speculation regarding a potential transaction, and a premium of 33% to Qualcomm’s unaffected 30-day volume-weighted average price
A report from Bloomberg says that Qualcomm is attempting to “fend off” the offer though, believing that it undervalues the company even at those numbers. However, as Qualcomm is a public company, the decision is up to the shareholders. Bloomberg’s sources tell them that they will likely be recommending their shareholders to reject the offer. On the other hand, Broadcom is confident that the proposed transaction will receive all necessary approvals from regulatory and antitrust authorities in a timely manner; and that their common global customers would embrace the proposed combination.