Broadcom ups Qualcomm offer to $121 billion
Broadcom raised its takeover bid for its rival chipmaker Qualcomm to about $121 billion Monday, piling pressure on Qualcomm to agree to what would be the biggest-ever takeover in the technology industry.
In offering $82 a share, San Jose’s Broadcom raised the stakes a month before Qualcomm’s annual shareholder meeting, at which it hopes to unseat the entire board. The bid, according to Broadcom, is its “best and final” offer.
“Any rational board would consider what we’ve put forward,” Broadcom CEO Hock Tan said.
The move comes at a time of consolidation in the chipmaking industry, and would create a tech giant whose products would be used in nearly all of the world’s smartphones. Whether a deal actually goes ahead remains an open question — Qualcomm’s leadership is fiercely opposed, while analysts have said that even if shareholders approved the deal, it could be rejected on antitrust grounds.
Qualcomm’s management team and board have argued that the takeover approach was opportunistic — coming during its legal fight with Apple — and priced too low.
But the revised offer may entice shareholders of the target company into demanding that its executives begin negotiations. Qualcomm reported a 96 percent drop in operating income last week, as Apple has refused to pay some licensing fees. It is also struggling to complete its own takeover bid, for the chipmaker NXP Semiconductor, amid pushback from investors of that company.
For Tan, Qualcomm’s problems are ones that he and his team can fix.
“We have a lot of respect for the tech and the innovation that comes with the 5G technology,” he said, referring to the next-generation wireless standard that Qualcomm has touted as its next big business opportunity. “But we believe, given our track record, we can do much more.”
Broadcom also pledged to pay a “significant” breakup fee in case a deal with Qualcomm is vetoed by regulators, as well as to pay additional cash if the two companies have not closed a transaction a year after announcement.
Qualcomm said that it is considering the new bid.