Broadcom Increases Acquisition Offer for Chipmaker Qualcomm to $121 Billion

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Broadcom is reportedly moving forward with its attempt to purchase chipmaker Qualcomm, by increasing its bid for the company to about $121 billion and $82 per share, described as a "final offer." The new offer comes three months after Broadcom's first bid for Qualcomm, originally valued at about $105 billion ($70 per share), plus $25 billion of net debt (via Bloomberg).

If the acquisition goes through it would still be considered the "largest-ever technology deal," although Qualcomm's board previously rejected the first offer and is said to have "dug in" against threats of potential hostile takeovers. With the increased offer, Broadcom now hopes to put pressure back on Qualcomm to accept the deal and "improve prospects" for Broadcom CEO Hock Tan to be nominated to Qualcomm's board should the deal go through.


Broadcom Ltd. has raised its bid for Qualcomm Inc. to about $121 billion, in an attempt to force what could be the largest-ever technology deal. The new offer of $82 a Qualcomm share will be Broadcom’s final offer, according to a statement Monday. The deal would take the form of $60 in cash and the remainder in Broadcom shares.

Broadcom’s hostile bid for the larger San Diego-based company is the latest and most audacious move by Tan in a string of deals that have made his company one of the world’s largest suppliers of semiconductors. He wants Qualcomm for its leading smartphone modem chip division, an example of what he calls a “franchise” that will continue to dominate.

If completed, 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.

Qualcomm is said to be pushing back against such acquisition offers because it see its own future to be "much brighter as a standalone company," further stating that it's "on the cusp" of entering new product markets. At the same time, Qualcomm has been in a legal battle with Apple for over a year now, after Apple accused Qualcomm of charging unfair royalties for "technologies they have nothing to do with" and failing to pay for quarterly rebates.

Throughout the lawsuits, Apple eventually considered removing Qualcomm modems from its devices altogether moving forward, and the latest report from KGI Securities analyst Ming-Chi Kuo pointed towards Intel-only modems for the 2018 iPhones.

Top Rated Comments

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33 months ago
"The deal would take the form of $60 in cash and the remainder in Broadcom shares."

My goodness, how on earth can they turn down 60 dollars in cash up front! Maybe I should offer a crisp $100 bill!
Score: 3 Votes (Like | Disagree)
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33 months ago
Qualcomm better sell, when all their high profile customers leave for the opposition, they will be left in the dust and forced to downsize and eventually file bankruptcy. Remember that chip maker or something like that who got too comfortable with Apple? Apple let them know years in advance that they were going to stop using their products and they didn’t take them seriously. I can’t remember the exact story but Apple is leaving Qualcomm things will be going downhill from there.
Score: 2 Votes (Like | Disagree)
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33 months ago
With various regulatory attention they're getting recently, US suppliers (Apple certainly but others have made their opinions known as well) seemingly unhappy with them, and their China strategy rumored to face headwinds with China's desire not to have them establish a monopolistic position I'm surprised any increase was offered. There's a lot of IP there but that landscape changes relatively quickly and their former business practices are under fire globally. Broadcom obviously has people looking at this much more deeply than I but I'm still surprised.
Score: 2 Votes (Like | Disagree)
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33 months ago

Qualcomm better sell, when all their high profile customers leave for the opposition, they will be left in the dust and forced to downsize and eventually file bankruptcy. Remember that chip maker or something like that who got too comfortable with Apple? Apple let them know years in advance that they were going to stop using their products and they didn’t take them seriously. I can’t remember the exact story but Apple is leaving Qualcomm things will be going downhill from there.

Yeah Imagination Technologies https://en.wikipedia.org/wiki/Imagination_Technologies
Score: 1 Votes (Like | Disagree)
Avatar
33 months ago

Yeah Imagination Technologies https://en.wikipedia.org/wiki/Imagination_Technologies

The same could be said for the group manufacturing sapphire that had all their eggs in one basket, invested heavily in capacity for expected Apple demand, then folded dramatically when Apple didn't meet the expected demand. I know there's a second side to that story with Apple having quite demanding contracts to achieve the capacity regardless of whether Apple fully utilized or not but the fact remains, having a significant portion of your business (which is generally 10%+ even though I believe in some of these examples Apple was far higher) is a large risk.
Score: 1 Votes (Like | Disagree)

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