Qualcomm said it has indeed received an acquisition bid from Broadcom worth USD 60 cash and USD 10 in Broadcom stock per share. Qualcomm noted that the unsolicited bid is non-binding. It will now see if it is in the best interest of its shareholders and provide no further comment until its review is finished.
Broadcom said its offer represents a 28 percent premium over the closing price of Qualcomm's stock on 02 November, the day before reports of the bid first emerged. The bid values Qualcomm at USD 130 billion, including USD 25 billion of net debt and assuming the company completes its pending acquisition of NXP Semiconductors at the agreed terms. Broadcom said it would go ahead with the bid even if Qualcomm does not complete the NXP takeover.
The company added that it expects to be able to resolve any regulatory concerns about the takeover, as the two chipmakers' businesses are largely complementary. The acquisition would more than double Broadcom's size, to annual revenues of USD 51 billion, and significantly strengthen its position in the mobile market and emerging sectors such as wearables and connected cars.
Broadcom has been growing steadily through acquisitions in recent years, earlier swallowing LSI, Emulex and Brocade. It again has the backing of Silver Lake Partners for the Qualcomm deal, with the shareholder agreeing to USD 5 billion in convertible debt financing.
While Broadcom appears to be taking advantage of a weak point for Qualcomm, when it is in dispute with Apple, another major customer and competition regulators in several countries, Qualcomm is expected to reject the bid initially as too low. Qualcomm noted that it is preparing for its next phase of growth by making focused investments to extend its leadership in mobile into new opportunities, while maintaining financial discipline and a robust capital return programme. The company highlighted the fact that there are many opportunities to drive substantial additional value for its shareholders as its technology and product roadmap move into new industries.
