Saturday, 18 November, 2017

Broadcom makes offer to acquire Qualcomm in record $105bn deal

Broadcom to return company seat to US Broadcom bids $130 Billion to acquire Qualcomm
Juana Turner | 07 November, 2017, 00:33

It's not a done deal, however.

Qualcomm and Broadcom have patent portfolios in wireless communications that are largely adjacent to each other, and antitrust concerns over any proposed deal could be muted because the companies have few areas of overlap beyond Wi-Fi solutions for wireless routers, Bluetooth drivers and some RF semiconductors.

Broadcom is in the process of closing its $5.5bn acquisition of Brocade, while Qualcomm is struggling through regulatory scrutiny to complete its $38bn deal for Dutch semiconductor vendor NXP. It's prepared to launch a proxy battle should Qualcomm spurn the $70-a-share proposal, a person familiar with the matter has said. As a result of all that, its stock has fallen steeply, making it a much better bargain than it was just a year ago - Broadcomm's offer now represents a 30 percent premium over the current stock price. The proposed transaction would be valued at approximately $130 billion, including $25 billion of net debt. Here's a wrap of what they've said so far.

Perhaps the most important new news on the bid is that Qualcomm is expected to reject this deal as it undervalues the company.

"Given Broadcom's press release regarding pursuing a U.S. M&A strategy, we believe Broadcom potentially sees accretion in the Qualcomm Technology Licensing segment".

"We are positive on the potential of this acquisition as it would bring in complementary cellular products and cost synergies, leading to immediate earnings per share accretion. It would value Qualcomm's equity at roughly $103bn".

Since publication Broadcom and Qualcomm have confirmed the offer, with Broadcom disclosing that the bid of $70 a share is made up of $60 cash and $10 in Broadcom shares.

And a premium of 33 per cent on Qualcomm's "unaffected 30-day volume-weighted average price".

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