Broadcom bids US$103b for Qualcomm, open to going hostile

Posted November 07, 2017

Qualcomm, based in San Diego, said that it is reviewing the bid, and that it will have no comment until that review is completed by its board. The combined Broadcom and Qualcomm, including NXP, will have pro forma fiscal 2017 revenues of approximately $51 billion and pro forma 2017 EBITDA of approximately $23 billion, including synergies.

Broadcom's own $5.5 billion (£4.2 billion) agreement to merge with US network provider Brocade Communications Systems previous year has been delayed while it is scrutinised by the US Committee on Foreign Investment (CFI), which investigates proposed acquisitions of US companies by foreign buyers on national security and intellectual property grounds.

The Financial Times is reporting that Broadcom is planning to acquire NXP, as well as Qualcomm.

While the value of the proposed bid has yet to be made public it is expected that the offer will be in the range of around $70 to $80 per share, valuing Qualcomm at over $100billion. The overall deal valued at $130bn.

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It is said that if Broadcom merges with Qualcomm, combination of Broadcom with Qualcomm will make Broadcom third largest Chip makers in the world.

Qualcomm said its board of directors is now reviewing the offer. Analysts say that if Broadcom can salvage the Apple relationship, it would sharply increase potential returns from the takeover.

Broadcom had $5.25 billion in cash and cash equivalent as of July 30.

Shares of Qualcomm rose about 1 percent in early trading.

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

If Broadcom decides to make a hostile bid, Qualcomm's governance rules would allow the rival to submit its own slate for the entire 10-member board by a Dec 7 nomination deadline.

The offer came after Broadcom chief executive Hock Tan appeared with President Donald Trump last week and announced the company is likely to relocate its headquarters from Singapore to the US.

Tan also has a history of cutting costs at acquired companies, and Charter Equity analyst Ed Snyder predicted Tan would cut away waste at Qualcomm.

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