Making mobile chips is big business and Qualcomm is one of the biggest chipmakers out there. Broadcom is also a major player — and big enough to offer up $105 billion USD to purchase Qualcomm. If this buyout happens, Bloomberg says it would be the largest technology takeover ever and will “rock” the electronics world. Qualcomm is well known for putting their mobile chips inside millions of Android phones and iPhones alike. Qualcomm is having a sort of falling out with Apple right now, but perhaps this deal could revive and restore that relationship.
Broadcom made an offer of $70 a share in cash and stock for Qualcomm, a 28 percent premium for the world’s largest maker of mobile phone chips as of the stock’s closing price on Nov. 2, before Bloomberg first reported talks of a deal. The proposed transaction is valued at approximately $130 billion on a pro forma basis, including $25 billion of net debt. Buying Qualcomm would make Broadcom the third-largest chipmaker, behind Intel Corp. and Samsung Electronics Co.
“The combination of the two companies could generate strong synergies and create a dominant wireless business and overall powerful global semiconductor leader,” said Mike Walkley, an analyst at Canaccord Genuity.
“The ball is now in Qualcomm’s court, with management now under pressure to convince shareholders why current management will be better at driving value than Broadcom,” said Stacy Rasgon, an analyst at Sanford C. Bernstein & Co., in a note to investors. “We expect a considerable amount of back and forth from here, but believe a floor will be put under the shares at least.”
It will be interesting to see how this plays out and what ends up happening with the Apple/Qualcomm case in the courts should the Broadcom offer be taken.