Saturday, November 25, 2017

Broadcom wants to acquire Qualcomm for $130bn in what could be one of the largest tech M&As ever

Broadcom’s proposal is a direct consequence of the growing IoT market which will drive business for data centres from the edge to the core.

Semiconductor device supplier Broadcom (NASDAQ: AVGO) has put forward its intention to acquire of Qualcomm (NASDAQ: QCOM) in a mammoth transaction that could top $130bn, including $25bn of net debt.

Under Broadcom’s proposal, the $70.00 per share to be received by Qualcomm stockholders would consist 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 November 2, 2017, the last unaffected trading day prior to media speculation regarding a potential transaction, and a premium of 33% to Qualcomm’s unaffected 30-day volume-weighted average price.

The Broadcom proposal stands whether Qualcomm’s pending acquisition of NXP Semiconductors N.V. (“NXP”) is consummated on the currently disclosed terms of $110 per NXP share or the transaction is terminated.

The proposed acquisition comes at a time when the semiconductor market continues to grow has more connected devices require chips to operate and help generate the necessary data to increase intelligence around user and devices behaviour.

Hock Tan, President and Chief Executive Officer of Broadcom, said: “Broadcom’s proposal is compelling for stockholders and stakeholders in both companies. 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.

“This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products. We would not make this offer if we were not confident that our common global customers would embrace the proposed combination.

“With greater scale and broader product diversification, the combined company will be positioned to deliver more advanced semiconductor solutions for our global customers and drive enhanced stockholder value.”

Also commenting, Thomas Krause, Broadcom Chief Financial Officer, said: “The Broadcom business continues to perform very well. Broadcom has completed five major acquisitions since 2013, and has a proven track record of rapidly deleveraging and successfully integrating companies to create value for our stockholders, employees and customers.

“Given the complementary nature of our products, we are confident that any regulatory requirements necessary to complete a combination with Qualcomm will be met in a timely manner. We look forward to engaging immediately in discussions with Qualcomm so that we can sign a definitive agreement and complete this transaction expeditiously.”