Broadcom offers to buy Qualcomm in $130 billion deal

Chipmaker Broadcom seeks to acquire Qualcomm

According to sources Qualcomm is not aware of the details of Broadcom's bid and the company has yet to make any comment. Including debt, Broadcom's bid values the transaction at $130 billion.

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

Shares of Qualcomm rose about 1 percent in early trading.

Broadcom shares were flat after hitting a record high of $281.80.

"Broadcom's proposal is compelling for stockholders and stakeholders in both companies".

China is set to scrutinize any deal closely after USA regulators blocked a flurry of chip deals by Chinese firms due to security concerns, thwarting the Asian country's attempt to become self-reliant in chip manufacturing.

Industry analysts believe that if Apple does not challenge the deal, it's one hurdle that Broadcom will have cleared. Qualcomm had $35.03 billion as of September 24. Broadcom also got a commitment letter for US$5 billion in financing from private equity Silver Lake Partners, an existing Broadcom investor. The transaction is expected to be accretive to Broadcom's Non-GAAP EPS in the first full year after close. We will maintain our fair value estimates of $68 for narrow-moat Qualcomm and $203 for narrow-moat Broadcom, but we would probably raise our fair value estimate for Broadcom-perhaps as much as 25%-if a definitive deal were reached.

Qualcomm has a shareholder-friendly corporate governance structure, making it more vulnerable to a takeover bid.

If Broadcom decides to make a hostile bid, Qualcomm's governance rules would allow the rival to submit its own slate for the entire 10-member board by a Dec 7 nomination deadline.

"We are well advised and know what our options are, and we have not eliminated any of those options", said Tan, who has pulled off a string of deals over the past decade.

Tan will be in NY and Boston this week for meetings with Qualcomm shareholders, according to people familiar with the matter.

The acquisition offer comes just days after President Trump announced that Broadcom would be moving its headquarters to the United States from Singapore and as Qualcomm is embroiled in a fierce legal battle with Apple.

"Chipmaker Broadcom officially unveiled a $130bn offer, including net debt, for Qualcomm on Monday, in what could be the largest tech deal in history".

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