Broadcom increases Qualcomm bid to $123 billion
The potential biggest-ever tech deal just got bigger.
Broadcom is sweetening its offer to acquire Qualcomm for more than $123 billion. This comes three months after Broadcom made an initial $103 billion offer to combine the two semiconductor giants.
As in the previous offer, Broadcom would acquire all outstanding shares of Qualcomm for $60.00 per share in cash. But this new approach includes $22.00 per share in Broadcom stock, where the previous offer was $10. That $60 offer is a 50% premium over Qualcomm stock’s closing price on Nov. 2,2017.
The deal, which amounts to $123.9 billion including debt Broadcom would assume, would be the largest-ever technology acquisition, according to Dealogic. The largest deal to date: Dell’s acquisition of EMC for about $65 billion, according to Dealogic.
This proposal, which represents Broadcom’s final offer, « includes substantially more Broadcom stock, which will allow Qualcomm stockholders a greater opportunity to participate in the upside created by the combined company’s strategic and operational advantages, » Broadcom CEO Hock Tan said in a letter sent to Qualcomm, which was made public.
Broadcom ( AVGO) shares were up 2% at $240.25 in early trading Monday. Qualcomm ( QCOM) shares were down 2% to $64.63.
In a statement, Qualcomm said its board would review the proposal « to determine the course of action it believes is in the best interests of the Company and its stockholders. »
The board unanimously rejected the earlier offer, saying it « dramatically undervalues Qualcomm and comes with significant regulatory uncertainty, and therefore is not in the best interests of Qualcomm stockholders.
Broadcom maintained its willingness to do the deal regardless of the outcome of Qualcomm’s ongoing effort to acquire NXP Semiconductors. The San Diego-headquartered Qualcomm made its $38 billion bid in October 2016 for Dutch-based NXP, a major provider of global automotive semiconductor sales.
Combined, Broadcom, which specializes in wired communication technology, and Qualcomm, a wireless telecommunications giant, would generate about $51 billion in annual revenue, and be a global tech player in the deployment of 5G, the next generation of mobile technology. 5G wireless networks are expected to improve connectivity for smartphones and tablets and home broadband networks, as well as self-driving cars and an endless lineup of other devices.
Broadcom currently has twin corporate headquarters in San Jose, Calif., and Singapore, which came from Singapore-based chipmaker Avago Technologies’ takeover last year of Broadcom, whose name it took. But in November, Broadcom CEO Tan said the company would move its headquarters to Delaware.
That move would likely help in regulatory approval of this deal, and its $5.5 billion bid it made last year for data center-connectivity company Brocade.
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