From Procurement to Profit

Broadcom Offers $130 Billion for Qualcomm

Broadcom Limited (NASDAQ: AVGO), a semiconductor device supplier created from a former division of HP, announced a proposal to acquire Qualcomm Incorporated (NASDAQ: QCOM) for $130 billion in cash and stock.

Analysts said Qualcomm is likely to reject the uninvited bid as too low.

They also said the proposed merger is likely to face opposition from government regulators, either on antitrust grounds or because Broadcom could be regarded as a foreign company attempting to buy sensitive technology.

Broadcom announced on Nov. 2 that it intends to change from a Singapore company to a U.S. corporation.

Qualcomm confirmed receiving the offer, and said only that its board of directors “will assess the proposal in order to pursue the course of action that is in the best interests of Qualcomm shareholders,” and will have no further comment until that analysis is completed.

Qualcomm is a longtime leader in cell phone chips and software, and produces the chips that enable autonomous vehicles. It has faced increasing competition in both sectors from Intel Corp.

Broadcom’s proposal of $70.00 per share to Qualcomm stockholders consists of $60.00 in cash and $10.00 per share in Broadcom shares.

Broadcom’s proposal represents a 28% premium over the closing price of Qualcomm common stock on Nov. 2, the last trading day  prior to media speculation regarding a potential transaction.

“This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products,” said Hock Tan, President and Chief Executive Officer of Broadcom.

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