Chipmaker Broadcom has submitted a $105 billion offer to acquire rival Qualcomm in a merger that could have a significant impact on the mobile device component segment.
Broadcom's unsolicited offer consists of a proposal to acquire each Qualcomm share for $60 in cash and a further $10 worth of Broadcom shares.
The proposal represents a 28% premium over Qualcomm's recent benchmark trading price and stands regardless of whether Qualcomm closes the planned acquisition of NXP Semiconductors for $110 per share. The offer is worth around $130 billion in total including $25 billion of net debt.
“This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products. We would not make this offer if we were not confident that our common global customers would embrace the proposed combination,” Broadcom CEO Hock Tan commented.
“With greater scale and broader product diversification, the combined company will be positioned to deliver more advanced semiconductor solutions for our global customers and drive enhanced stockholder value.”
The proposed merger still requires approval from Qualcomm shareholders. In a statement, Qualcomm's board said it will carefully assess the proposal in consultation with financial and legal advisors to determine whether to recommend it to its investors.
But off the record, people familiar with the offer told Reuters that the board is inclined to reject the offer on the grounds that it is too low and fraught with regulatory uncertainty.
In a letter sent to Qualcomm's board, Broadcom's Tan said the company and its advisors have conducted an extensive analysis of the regulatory approvals that will be required and are confident that approvals would be forthcoming in a timely manner.