Broadcom plans Qualcomm bid according to sources

Broadcom plans Qualcomm bid according to sources

Broadcom plans Qualcomm bid according to sources

Both the S&P 500 and the Dow Jones industrial average hit new record highs Monday after news broke that Broadcom proposed to acquire Qualcomm in a deal valued at $130 billion. We note that Broadcom's bid is independent of Qualcomm's success in closing its bid for NXP. Under Broadcom's proposal, Qualcomm shareholders would receive $70 per share - $60 in cash and $10 in shares of its rival.

Perhaps the most important new news on the bid is that Qualcomm is expected to reject this deal as it undervalues the company.

Shah believes Broadcom would encourage Qualcomm to complete its NXP acquisition as it has extensive distribution channels, scale and exposure to the fastest growing segments in automotive, where Broadcom is underpenetrated.

Broadcom's acquisition would be the most ambitious move by Tan, who has turned a small, scrappy chipmaker into a $100-billion company with a string of deals, since he took the helm a decade ago.

According to sources Qualcomm is not aware of the details of Broadcom's bid and the company has yet to make any comment.

More news: Rafael Nadal Ends Year Ranked Number 1 In The World

Qualcomm's share price rose as much as 14 per cent when the news broke.

Broadcom also is waiting on regulatory approval to purchase San Jose's Brocade Communication Systems for $5.9 billion.

The proposed deal comes at a time when there has been significant consolidation within the chipset market, driven by greater demand for smartphones and connected devices.

Such a massive deal has the potential to invite scrutiny from regulators, but Broadcom CEO Hock Tan said in a letter to Qualcomm that he was confident that the transaction would not raise any red flags for antitrust enforcers. Broadcom already provides designs for Wi-Fi and Bluetooth chips, and by bringing in Qualcomm it will be able to encompass LTE and 5G capabilities.

Related news