Broadcom has made an unsolicited bid to buy Qualcomm for a price of $60 per share, plus $10 in Broadcom stock, valuing the company at around $130 billion and a 28% premium on the market price just before the bid. Qualcomm is itself in the process of trying to acquire NXP (Qualcomm Extends Offer for NXP) and Broadcom is interested in the offer, whether or not the NXP deal goes through.
Broadcom sees the the Qualcomm cellular business as being complementary to its own business and believes that owning the company would accelerate innovation at both companies. It also expects financial benefits and expects the deal to add Broadcom’s EPS in the first full year after the deal.
Analyst Comment
I’m not close enough to this deal to have a good sense of it. Clearly, the combined company would be the third largest chip company after Intel and Samsung and there are obvious synergies. However, specialist analysts believe that the bid is somewhat opportunistic, as Qualcomm’s share price has taked a dip on fears of problems for the firm (Qualcomm Faces Antitrust Fine in Taiwan) and potential issues from its dispute with Apple. (ITC Agrees to Look at Qualcomm/Apple Dispute). Nothing is likely to happen quickly as there are bound to be lots of regulatory issues and some analysts do not seem to think the bid will succeed. (BR)
