Following a report last week that stated Broadcom was "exploring" the possibility of buying Qualcomm, which has made LTE chips for Apple's iPhone line for many years, today Bloomberg reports that this offer is moving forward. Broadcom has offered to acquire Qualcomm for $70 per share in cash and stock, in a transaction valued at a total of $130 billion. If completed, it would be marked as "the largest technology acquisition ever."
Through the deal, Broadcom would become the third-largest chipmaker in the world, behind Intel and Samsung Electronics, and the combined Broadcom-Qualcomm business would "instantly become" the default provider of certain components required to build more than one billion smartphones sold every year. The acquisition would eclipse Dell's $67 billion purchase of EMC in 2015, considered at the time the biggest in the technology industry.
“This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products," Hock Tan, resident and chief executive officer of Broadcom, said in a statement Monday. “We would not make this offer if we were not confident that our common global customers would embrace the proposed combination.’’
In the midst of the acquisition news, Qualcomm and Apple have been embroiled in a legal battle since January after Apple sued Qualcomm for $1 billion. Apple accused Qualcomm of charging unfair royalties for "technologies they have nothing to do with" and failing to pay for quarterly rebates. As the disagreement escalated throughout 2017, with a new lawsuit emerging just last week, Apple is said to be considering eliminating Qualcomm chips from its devices completely moving forward.
However, through a newly combined Broadcom-Qualcomm company, which could bring about new management, analyst Stacy Rasgon pointed out that the acquisition could finally "smooth things over" between Apple and Qualcomm.
If Broadcom can pull off a deal, it could help smooth things over with Qualcomm’s biggest adversary. A change of management at Qualcomm might help resolve the dispute with Apple more quickly, according to Sanford C. Bernstein & Co. analyst Stacy Rasgon.
Broadcom also said that its offer stands whether or not Qualcomm completes its pending acquisition of NXP Semiconductor, which is currently facing regulatory scrutiny in Europe and resistance from NXP shareholders. Following the signing of a definitive agreement, Broadcom said it expects the proposed deal to be completed "within approximately 12 months."
Update 11/13: Qualcomm has rejected Broadcom's offer, stating the following in a press release: "It is the Board's unanimous belief that Broadcom's proposal significantly undervalues Qualcomm relative to the Company's leadership position in mobile technology and our future growth prospects."