Broadcom offers to buy mobile chipmaker Qualcomm for $103 billion

Chipmaker Broadcom seeks to acquire Qualcomm

Broadcom made a $105 billion offer for Qualcomm Monday in what will be the largest technology deal ever if it's successful.

It's not a done deal, however.

Reuters reported that Broadcom had not contacted Qualcomm about the offer prior to Tan's letter.

Qualcomm has a (long) pending acquisition, of chipmaker NXP Semiconductors NV, in the works - and Broadcom notes that its offer is not dependent on whether or not Qualcomm manages to close with NXP on the now disclosed terms (it's offering ~$39BN for the Netherlands-based chipmaker which has a focus on car-related applications and also security-based identification).

Citing sources, Bloomberg claimed that the Qualcomm board is likely to advise shareholders to reject the deal, while also claiming that any potential deal could run into regulatory problems. That marks a 27.6% premium over Qualcomm's stock closing price ($54.84) on 2 November. The proposed transaction would be valued at approximately $130 billion, including $25 billion of net debt. In other words, don't expect this deal to close anytime in the near future.

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"We would not make this offer if we were not confident that our common global customers would embrace the proposed combination", Tan said in a statement.

"Given Broadcom's press release regarding pursuing a U.S. M&A strategy, we believe Broadcom potentially sees accretion in the Qualcomm Technology Licensing segment". Qualcomm recently agreed to buy NXP for a total of $47 billion in an all-cash deal. "We estimate Qualcomm/NXP Semiconductors would drive over $13 in earnings per share accretion and result in consolidated earnings per share of $32.06, resulting in fair value of $465".

Specifically Broadcom is offering to pay $70.00 per Qualcomm share, with $60.00 being in cash and $10.00 per share in Broadcom shares.

And a premium of 33 per cent on Qualcomm's "unaffected 30-day volume-weighted average price".

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