Broadcom Makes Herculean $130 Billion Offer For Chip Rival Qualcomm

Broadcom is hoping to pull of the largest technology transaction of all time in its bid to acquire Qualcomm. The company made an ambitious cash and stock offer valued at around $130 billion, and it stands whether Qualcomm is able to consummate its deal to acquire NXP Semiconductors at $110 per share or not. Either way, Qualcomm now has a big decision to make. It may also try to negotiate an even higher price.

The unsolicited proposal from Broadcom comes to $70 per outstanding share, broken down into $60 in cash and $10 per share. That represents a 28 percent over the closing price of Qualcomm's common stock yesterday, the last unaffected trading day prior to media speculation, and a premium of 33 percent to Qualcomm's unaffected 30-day volume-weighted average price.

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"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."

If Qualcomm accepts the offer, Broadcomm would instantly become the third-largest semiconductor company, trailing only Intel and Samsung, a couple of chip heavyweights in their own right. It would also make Broadcom the go-to company for several components that are used in the construction of smartphones and tablets.

As it stands, Dell's acquisition of EMC for $67 billion in 2015 stands as the largest tech buyout ever. Broadcom's proposed purchase price is significantly bigger, though it is not a given that Qualcomm will accept the offer. Citing people familiar with Qualcomm's plans, Bloomberg reports the company is preparing to fend off the offer because it feels Broadcom's proposal is an opportunistic bid to purchase the company for cheap.

Broadcom's offer comes as Qualcomm is entrenched in a legal battle with Apple. Qualcomm makes the bulk of its money from licensing mobile phone technology, and it has accused its biggest customer, Apple, of infringing on three of its patents. As a result, Qualcomm risks losing Apple as a customer.

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