On Nov. 6, Broadcom announced an unsolicited bid to acquire Qualcomm for $70 per share ($60 in cash and $10 in stock) in a deal valued at $130 billion, assuming that Qualcomm's ongoing bid to acquire NXP Semiconductors for $38 billion goes through.
While the value of the proposed bid has yet to be made public it is expected that the offer will be in the range of around $70 to $80 per share, valuing Qualcomm at over $100billion. The offer represents a roughly 28 percent premium to Qualcomm's closing price on Thursday of $54.84, before speculation about a pending offer from Broadcom sent its shares soaring on Friday.
It is said that if Broadcom merges with Qualcomm, combination of Broadcom with Qualcomm will make Broadcom third largest Chip makers in the world.
A Qualcomm spokesman contacted by TechCrunch declined to comment on Broadcomm's proposal at this time.
Japanese telecoms firm SoftBank has already agreed a deal to buy British semiconductor firm Arm, while Intel bought Altera, and Qualcomm has agreed a deal for NXP. "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", said Hock Tan, president and chief executive officer of Broadcom. "This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products".
Reuters reported that Broadcom had not contacted Qualcomm about the offer prior to Tan's letter. While the deal might be massively accretive to Broadcom, we also expect this management team to be disciplined, so while we might see modest raises from here, we don't foresee a bidding war.
There are now 27 buys, 2 holds and no sells on Broadcom with an average 12-month price target of $291.
The bid comes as Broadcom plans to move its headquarters to the United States from Singapore.