Broadcom ups bid for Qualcomm to $121B
Merged company could gain an edge in 5G tech
The potential biggest-ever tech deal, one that would create the world’s third-largest maker of chips in smartphones, computers and other devices, just got bigger.
Broadcom is sweetening its offer to acquire Qualcomm for more than
$121 billion. This comes three months after Broadcom made an initial
$103 billion offer to combine the two semiconductor giants.
A combined company would touch consumers’ communication patterns in a multitude of ways. Qualcomm’s chips are in iPhones, Android smartphones and new “always-on” Windows laptops. Broadcom makes chips in Android smartphones and iPhones, too, as well as game systems, set-top boxes and data centers.
The combined company, which would generate about $51 billion in annual revenue, stands to be a global tech player in the deployment of 5G, the next generation of mobile technology.
5G wireless networks promise Internet connections 10 to 100 times faster than current networks and are expected to improve connectivity for smartphones and tablets and home broadband networks, as well as self-driving cars and an endless lineup of other devices.
As in the previous offer, Broadcom would acquire all outstanding shares of Qualcomm for $60 per share in cash. But this new approach includes $22 per share in Broadcom stock, where the previous offer was $10. That $60 offer is a 50% premium over Qualcomm stock’s closing price on Nov. 2.
The deal, which amounts to $148 billion including debt Broadcom would assume, would be the largest-ever technology acquisition, according to Dealogic. The largest to date: Dell’s acquisition of EMC for about $65 billion.
This proposal, which represents Broadcom’s final offer, “includes substantially more Broadcom stock, which will allow Qualcomm stockholders a greater opportunity to participate in the upside created by the combined company’s strategic and operational advantages,” Broadcom CEO Hock Tan said in a letter sent to Qualcomm, which was made public.
In a statement, Qualcomm said its board would review the proposal “to determine the course of action it believes is in the best interests of the Company and its stockholders.”
The board unanimously rejected the earlier offer, saying it “dramatically undervalues Qualcomm and comes with significant regulatory uncertainty, and therefore is not in the best interests of Qualcomm stockholders.
A deal could also help smooth over legal squabbles between Apple and Qualcomm. The two companies have been battling over how much Apple owes in licensing fees to Qualcomm.