Broadcom offers $103B for Qualcomm in chip megadeal

NEW YORK – Broadcom has 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.

The company said Monday that it would not have pushed forward with the proposed buyout if it weren’t confident its global customers “would embrace” the offer.

It was not clear to whom Broadcom was referring, but Apple is Qualcomm’s biggest customer. Qualcomm and Apple have been locked in a long-running legal battle, with Appl e refusing to pay any royalties owed to Qualcomm for some of the features in the iPhone.

Industry analysts believe that if Apple does not challenge the deal, it’s one hurdle Broadcom will have cleared.

“Given Apple’s significance, we believe this deal will not go forward unless Apple is on board,” wrote analysts with William Blair.

William Blair’s Anil Doradla also wrote that Broadcom’s recent decision to move its legal home from Singapore to the U.S. would likely take a “more amiable approach toward handset industry players” and try to resolve Qualcomm’s existing legal disputes.

President Donald Trump appeared with Broadcom Corp. CEO Hock Tan last week, saying the company will relocate to the United States.

There has already been broad consolidation in the computer chip sector, and a tie-up between the two giant companies would create a massive producer.

The Broadcom offer of $70 per share to Qualcom m stockholders would be $60 per share in cash and $10 per share of Broadcom.

Broadcom says its proposal is a 28 percent premium over the closing price of Qualcomm common stock Thursday, the last “unaffected” trading day for the companies.

It has also offered to pick up $25 billion in debt.

Qualcomm, based in San Diego, said it is reviewing the bid and will have no comment until that review is completed by its board.

Broadcom Ltd., which manufactures communications chips around the world, said last week that it would relocate its legal address to Delaware once shareholders approve the move, bringing $20 billion in annual revenue back to the U.S.

Its most recently reported annual revenue was $13.2 billion worldwide.

A year ago, the company entered a $5.5 billion agreement to merge with U.S. network provider Brocade Communications Systems, but that has been delayed while it’s scrutinized by the Committee on Foreign Investment in the United States. The high-level government committee investigates proposed acquisitions of U.S. companies by foreign buyers on national security and intellectual property grounds.

By relocating its legal home in the U.S., Broadcom can avoid the CFIUS process. Broadcom’s corporate headquarters are in San Jose, California.

Last week, Qualcomm reported revenue of $22.3 billion for fiscal 2017.

Broadcom said if the deal is approved, it expected a combined company to have revenues of about $51 billion.