Broadcom proposes to acquire Qualcomm for $130 billion

Broadcom has made an offer to acquire Qualcomm. Under Broadcom’s proposal, $70 per share is to be received by Qualcomm stockholders, which would consist of $60 in cash and $10 per share in Broadcom shares.

In a press statement, Broadcom stated the following:

“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,” said Hock Tan, President and Chief Executive Officer of Broadcom. “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.”

Avago deal: Key implications

A Singaporean firm (Avago) bought Broadcom for $37 billion and changed their name to Broadcom. A good portion of Broadcom’s management stuck around, but the key positions are dominated by Avago employees.

Photo: Android Police

Avago has the money to make acquisitions, and they seem to be interested in buying up western brands in order to bolster their position in the market. Qualcomm, an industry leader in ARM reference designs seems like a good ploy. However, this is certainly going to raise eyebrows in the competition commissions as it is being speculated that this deal will run into regulatory hurdles.

If this deal were to succeed, it would bolster Broadcom’s financials. However, with Qualcomm under the scanner for patent abuse, this makes for an interesting development. This deal would make Broadcom the largest supplier of components for electronic devices, which would be a strong position. Only time will tell if this deal.

Source: Broadcom Press Release