Broadcom Bids $130B for Qualcomm to Remake Network and Mobile Chip Market

Monday Nov 6th 2017 by Sean Michael Kerner
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The unsolicited offer of $70 per share would be one of the largest tech deals in history, when and if it ever is completed.

Broadcom announced on Nov. 6 that it has proposed to acquire rival network and mobile silicon vendor Qualcomm in a deal valued at $130 billion. Under the terms of the proposed deal, Broadcom would pay $70 per each Qualcomm share, which is a 28 percent premium over Qualcomm's share closing price on Nov. 2.

If Broadcom is able to get both shareholder and regulatory approval for the acquisition of Qualcomm, the deal will be one of the biggest ever in the Broadcomtechnology industry. Broadcom has been steadily growing its business in recent years as the demand for networking and mobile silicon has increased. Qualcomm's business, which has been largely focused in mobile networking and connectivity, has also grown, though it has faced some challenges.

"Broadcom's proposal is compelling for stockholders and stakeholders in both companies," Hock Tan, president and chief executive officer of Broadcom, stated. "Our proposal provides Qualcomm stockholders with a substantial and immediate premium in cash for their shares, as well as the opportunity to participate in the upside potential of the combined company."

In Tan's view, the proposed acquisition would be a "complementary transaction" that provides benefits to both companies. He added that Broadcom would not have made the offer if the company were not confident that both companies common global customers would embrace the proposed combination.

"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," Tan stated.

Qualcomm is already in the process of acquiring NXP, which is a deal that was first announced in October 2016. The Qualcomm NXP deal is valued at approximately $47 billion, with Qualcomm set to pay $110 for each NXP common share.

"Our proposal stands whether your pending acquisition of NXP is consummated on the currently disclosed terms of $110 per share or that transaction is terminated," Tan wrote in a letter to Qualcomm's Board of Directors.

Broadcom is also in the midst of another acquisition that was first announced over a year ago as well. In November 2016, Broadcom made a $5.9 billion bid for Brocade.

Though Broadcom has not yet closed on Brocade, Broadcom has completed five other acquisitions in recent years.

"The Broadcom business continues to perform very well," Thomas Krause, chief financial officer at Broadcom, stated. "Broadcom has completed five major acquisitions since 2013 and has a proven track record of rapidly deleveraging and successfully integrating companies to create value for our stockholders, employees and customers."

Sean Michael Kerner is a senior editor at EnterpriseNetworkingPlanet and InternetNews.com. Follow him on Twitter @TechJournalist.

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