Qualcomm to reject Broadcom's unsolicited $103 billion bid?

Qualcomm to reject Broadcom's unsolicited $103 billion bid?
Now that Broadcom has a $103 billion unsolicited bid on the table for fellow chip maker Qualcomm, the word from four people familiar with Qualcomm's thinking is that the San Diego based provider of Snapdragon mobile chips is going to turn down the deal. Broadcom says that for every share of Qualcomm it receives, the latter's stockholders will get $60 in cash and $10 in Broadcom stock.

The $70 face value of the transaction is a 28% premium from Qualcomm's closing stock price the day before rumors about the merger first started to appear. Qualcomm's Board of Directors is rumored to have met today and there is speculation that the company will call the offer inadequate in an announcement to be made tomorrow. Sources close to the deal say that Broadcom is preparing to challenge Qualcomm's sitting board members with its own hand-picked slate at the next stockholder's vote. That is a rather long and expensive way for Broadcom to get its target to the negotiating table. The fastest and easiest way to convince Qualcomm and its stockholders to agree to a deal would be to raise the price of the bid.

Even if Qualcomm agrees to a transaction, regulatory agencies would have to give their approval, along with stockholders of both firms. For Qualcomm stockholders, this is a nice distraction from all of the lawsuits that the chip maker has found itself involved in, including several that feature Apple. Among other things, the firm has been accused of not licensing its standard essential patents at a fair, reasonable and non-discriminatory manner. It also sought a ban on iPhone sales in China.

Broadcom says that it is interested in closing the deal with Qualcomm whether or not the latter closes its own deal to buy NXP Semiconductors NV for $38 billion. Both sides agreed to the deal in October 2016. Qualcomm says that it will not significantly raise its bid for NXP as part of a "Scorched Earth" defense against Broadcom. With that strategy, a company that is being targeted by another enters into some questionable deals to get the possible acquirer to back off.

source: Reuters

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28 Comments

1. Derekjeter

Posts: 1557; Member since: Oct 27, 2011

Silent partner in all this would be Apple trying to buy Qualcomm. Don’t put it pass them.

2. kiko007

Posts: 7521; Member since: Feb 17, 2016

Apple has no need to buy QC. They have alternative methods of acquiring modems and the profit gained from owning the chip maker would be pennies on the dollar for Apple. If you think they'd do it because of the lawsuits, that's ridiculous. None of the sums exchanged in the courtroom would be anywhere near the total cost of acquisition.

3. iczer

Posts: 160; Member since: Oct 14, 2015

What are you talking about?

4. kiko007

Posts: 7521; Member since: Feb 17, 2016

OP stated Apple might be a player in a Qualcomm sale. I proposed why that wouldn't be something Apple would desire.

20. Back_from_beyond

Posts: 1476; Member since: Sep 04, 2015

No need maybe, but Apple has been gathering up companies and technologies the last few years to make their own design components. Qualcomm's modems are currently the best in the business. If Apple wants to attain that technology too, they're likely to go for the best. If however Qualcomm falls into combined Broadcom/Apple hands odds are it won't bode well for the future of Snapdragon powered Android phones. On the other hand it would open up the door for the Exynos, Kirin, Mediatek powered devices. So yes to some extent it makes perfect sense for Apple to have a stake in this potential buy. On top of that Apple and Qualcomm have been suing each other all year so this could just be another means of payback.

5. lyndon420

Posts: 6898; Member since: Jul 11, 2012

Makes total sense to me. Apple needs to secure a chip maker for themselves.

12. L0n3n1nja

Posts: 1588; Member since: Jul 12, 2016

Apple already designs their own chip and Qualcomm doesn't manufacture any on their own, they also design. I think Samsung and Intel are the only 2 who manufacturer their own chip designs.

13. Nine1Sickness

Posts: 896; Member since: Jan 30, 2011

If Apple manufacturers their own chips, who would they sue?

6. KingSam

Posts: 1505; Member since: Mar 13, 2016

If Apple buys Qualcomm they would have the future of Android in their palms. Considering all major flagships and even budget pg\hones use Snapdragon,

15. Michigan

Posts: 246; Member since: Nov 19, 2016

you are wrong Samsung can start doing the chips for all the Android oems en become the biggest benefactor.

19. An.Awesome.Guy

Posts: 636; Member since: Jan 12, 2015

At least MediaTek, Samsung and Huawei can deliver chips for manufactures, but that would make it funny to see Apple introducing the Apple A12 chips to all Android phones, while iphone has the Apple A14 chip :P

7. Kevro_86

Posts: 66; Member since: Oct 19, 2011

Qualcomm needs to focus on not being embarrassed by Apple. The fact that their latest & greatest Snapdragon 835 is incapable of capturing 4K video at 60fps is truly pathetic.

9. Phullofphil

Posts: 1833; Member since: Feb 10, 2009

Why is it pathetic. Do you really need 4K on a phone. Any how apples chips are way better. I wish ther was even more compitition than just snapdragon and apple in the usa

10. Peacetoall unregistered

Exactly 4k isn't even mainstream

17. Nopers unregistered

Android fanboys before Apple got 4K “omg iPhone still hasn’t got 4K video yet? We’ve had it for years” After “exactly, 4K isn’t even mainstream” The hypocrisy is real.

24. jacky899

Posts: 431; Member since: May 16, 2017

If Samsung had 4k@60fps and Apple didn't, the armies of Samsung nationalist would flood PA with comments to insult Apple and later call out Apple for copying when they do implement it. Such hypocritical losers.

22. sgodsell

Posts: 7605; Member since: Mar 16, 2013

4k has been on Android for years. The only thing that the iPhone 8's and X do right now with the A11 is take 4k 60 fps video vs 4k 30 fps video on Android. That is it. BTW 4k 60 fps eats your storage flat out in no time.

28. mikehunta727 unregistered

1 min of 4K video at 60 FPS encoded in h.265 only uses 50 MB more than a 4K video at 30 FPS encoded in h.264 for A11 devices, not much more at all (400 MB vs 350 MB)

14. Nine1Sickness

Posts: 896; Member since: Jan 30, 2011

While people are pushing for 4k, Comcast are still charging their customers $9.95 for 1080p service.

16. Avieshek unregistered

If Qualcomm incorporates H.265 or (HEVC) than even the midrange Snapdragon chips will do the same of recording 4K @60fps.

18. Nopers unregistered

Uh no. Even filming in H.265 it’s about 400MB/ min of video. Mid rangers like the SD652 already support H.265 decoding but encoding is another story.

23. jacky899

Posts: 431; Member since: May 16, 2017

Samsung posted their 4k@60fps claim on their Note 8 page when Iphone 8/X was announced intending to take away a bit of Apple's thunder but took it down hours later after realizing the Snapdragon and Exynos are not fast enough to support 4k@60fps.

26. mootu

Posts: 1541; Member since: Mar 16, 2017

The Exynos is fast enough for 4k @ 60, Samsung won't enable it for fear of splitting the userbase and being sued in the US. Same reason Apple is being sued by Qualcomm for slowing down it's modems to match the Intel ones which are about 50% slower than the Qualcomm equivalents which in turn makes the Qualcomm modem look bad.

8. Phullofphil

Posts: 1833; Member since: Feb 10, 2009

It would only be for the patents I would think. They have access to better chips for there phones right now. I think the only reason there dominant in the USA is because of there patent catalog. Not because they make the best chips. I miss the day when there was Texas Instruments OMAP, along with Exynos, nvidea tygra, and the snap dragon competing with some others for the best soc and making far different phones. Almost all android chips that are in flagships are the snapdragon. In the United States anyhow. I miss the good compitition.

11. Tziggy14

Posts: 626; Member since: Sep 02, 2014

And order is restored

21. KeyserSoze

Posts: 387; Member since: Oct 06, 2014

I would not just say "No" to Broadcom, but "Hell motha fockin no, cheap low-balling beetches!"

25. jacky899

Posts: 431; Member since: May 16, 2017

Greedy, power-monging leadership at Qualcomm won't let go of the helm. Qualcomm is no where worth that much money especially considering their chips are gradually becoming outperformed by other ARM chip designs. Qualcomm is a sinking ship but I'm not sure if Broadcom could save them. The only real reason to buy them is to get their patents and that would benefit companies like Nvidia who was forced out of the ARM race by Qualcomm for this reason.

27. mootu

Posts: 1541; Member since: Mar 16, 2017

And lets be honest there's not much point in having 4k @ 60 on a phone with only 64 gig of none expandable storage.

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