Broadcom raises its offer for Qualcomm to $120bn

  • Broadcom raises its offer for Qualcomm to $120bn

Broadcom raises its offer for Qualcomm to $120bn

The offer represents a 50 percent premium over the value of Qualcomm's stock on November 2, the last day before reports surfaced that Broadcom would bid to acquire the company. That offer was unanimously rejected by Qualcomm's board of directors last November on the basis that it undervalued the company.

Broadcom is sweetening its offer to acquire Qualcomm for more than $121 billion.

Broadcom Ltd plans to unveil a new approximately $120 billion offer for Qualcomm Inc on Monday, aiming to ratchet up pressure on its US semiconductor peer to engage in negotiations, people familiar with the matter said on Sunday.

Qualcomm (San Diego) said in a statement that it's board would review Broadcom's proposal with legal and financial advisors.

If completed, the deal would be the largest-ever in the tech sector and create a powerful player in the booming sector fueled by growth in smartphones and an array of connected devices from cars to wearables.

Broadcom remains confident that the proposed transaction would be completed within around 12 months following the signing of a definitive agreement. Broadcom will also dangle a "reverse termination fee" that would compensate Qualcomm stakeholders if the deal were to collapse for regulatory reasons. But a growing number of NXP holders, led by activist investor Elliott Management Corp., are pushing back against Qualcomm's $110-a-share offer and calling for a price greater than a $135-a-share estimate of the company's stand-alone value. Qualcomm shares are down 3.7% to a market cap of about $94.2 billion.

Qualcomm responded that it would consider the offer, but declined to comment further.

Consumers have a stake in the contest, because Qualcomm is likely to be closely tied to the performance of future handsets - particularly a new generation of wireless technology called 5G - and prices that users may pay.

Singapore-based Broadcom is known for its connectivity chips used in products ranging from mobile phones to servers and Qualcomm provides chips to mobile carrier networks to deliver broadband and data.

At Qualcomm's March 6 shareholder meeting, Broadcom plans to nominate a slate of directors to replace Qualcomm's board.

The move by Broadcom comes at a time of consolidation in the chipmaking industry, and it would create a tech giant whose products would be used in almost all of the world's smartphones.