Broadcom offers $103 billion for Qualcomm, sets up takeover battle

Broadcom offers $103 billion for Qualcomm, sets up takeover battle

Broadcom's offer represents a premium of 27.6 percent to Qualcomm's closing price of $54.84 on Thursday, a day before media reports of a potential deal pushed up the company's shares.

The company is inclined to reject the bid as too low and fraught with risk that regulators would reject it or take too long to approve it, people familiar with the matter told Reuters.

Broadcom is making an unsolicited, $130 billion offer for rival chipmaker Qualcomm, the largest deal ever in the tech industry that will face intense regulatory scrutiny.

Broadcom is offering a combination cash-and-stock deal of $70 per share.

Last week, Qualcomm reported revenue of $22.3 billion (£17 billion) for 2017, but Broadcom says the combined company could deliver revenues of around $51 billion (£38.9 billion).

A combined Broadcom-Qualcomm would become the dominant supplier of chips used in the 1.5 billion or so smartphones expected to be sold around the world this year.

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Including debt, the bid values the transaction at $130bn in total.

"We would not make this offer if we were not confident that our common global customers would embrace the proposed combination", Tan said in a statement.

"Broadcom's proposal is compelling for stockholders and stakeholders in both companies". Broadcom primarily focusses on Wi-Fi and Bluetooth chips.

A year ago, the company entered a $5.5 billion agreement to merge with US network provider Brocade Communications Systems, but that has been delayed while it's scrutinized by the Committee on Foreign Investment in the United States.

Broadcom president and chief executive Hock Tan said it was a "complementary transaction" that would position the combined company as a "global communications leader".

Qualcomm provides chips to carrier networks to deliver broadband and mobile data and is also in the process of closing a US$38 billion bid for automotive chipmaker NXP Semiconductors NV that it made past year. Qualcomm apparently isn't happy with the offer, with Bloomberg saying that Qualcomm thinks the deal "undervalues the company".

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