Qualcomm expected to keep their extra m and say no to Broadcom

07 November, 2017, 01:36 | Author: Barbara Daniel
  • A sign is posted at a Qualcomm office on November 1 in San Jose California. – AFP

Reports suggest that Broadcom would not go over Qualcomm's offer of $110 per share to acquire NXP, so it may add urgency to NXP investors to close the deal after all.

Hock Tan, president and CEO of Broadcom, said in a statement: "This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products". 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.

Following rumors over the weekend, chipmaker Broadcom has today confirmed it has approached wireless chipmaker Qualcomm with an acquisition offer that values the company at $130BN (including $25BN of net debt).

The acquisition would be the largest-ever in the technology industry.

Broadcom is offering a combination cash-and-stock deal of $70 per share.

However, the Financial Times reports two unnamed sources who claim that Qualcomm's shareholders could be set to reject the takeover, claiming the valuation is too low and the merger would face significant regulatory challenges.

Broadcom says their proposal is a 28% over the closing price of shares in the company on Thursday, the last "unaffected" trading day for the companies. Including debt, the transaction is worth US$130 billion.

Broadcom, Qualcomm and NXP together would have control over modems, Wi-Fi, GPS and near-field communications chips, a strong position that could concern customers such as Apple and Samsung Electronics Co Ltd because of the bargaining power such a combined company could have to raise prices. The Broadcom proposal stands whether Qualcomm's pending acquisition of NXP Semiconductors N.V. ("NXP") is consummated on the now disclosed terms of $110 per NXP share or the transaction is terminated.

A year ago, the company entered a $5.5 billion agreement to merge with US network provider Brocade Communications Systems, but that has been delayed while it's scrutinized by the Committee on Foreign Investment in the United States.

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