On Nov. 6, Broadcom announced an unsolicited bid to acquire Qualcomm for $70 per share ($60 in cash and $10 in stock) in a deal valued at $130 billion, assuming that Qualcomm's ongoing bid to acquire NXP Semiconductors for $38 billion goes through.
Reports claim the merger between Broadcom and Qualcomm would create a company with a market capitalisation of more than $200 billion and would be one of the biggest takeovers in technology sector history.
Broadcom's offer is at 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.
Perhaps the most important new news on the bid is that Qualcomm is expected to reject this deal as it undervalues the company.
Qualcomm has a (long) pending acquisition, of chipmaker NXP Semiconductors NV, in the works - and Broadcom notes that its offer is not dependent on whether or not Qualcomm manages to close with NXP on the now disclosed terms (it's offering ~$39BN for the Netherlands-based chipmaker which has a focus on car-related applications and also security-based identification). The company has gone so far with its Apple fight that it recently filed a lawsuit seeking to ban sales of the iPhone in China. "We would not make this offer if we were not confident that our common global customers would embrace the proposed combination", said Tan in a press statement.
The agreement would push the combined firm to become the third-largest chipmaker in the world, behind Intel and Samsung, whilst giving Broadcom a strong foothold in the developing 4G and 5G markets. CEO Hock Tan said the U.S. "presents the best place for Broadcom to create shareholder value", supported by the tax plan. CEO Hock Tan last week, saying the company is likely to relocate its headquarters from Singapore to the United States.