Rumor: Broadcom to raise bid for Qualcomm to $80-82 a share from current $70 offer (UPDATE)

Rumor: Broadcom to raise bid for Qualcomm to $80-82 a share from current $70 offer (UPDATE)
According to a report published today, Broadcom is going to raise its unsolicited bid for fellow chipmaker Qualcomm to $120 billion from the current $103 billion offer that was put on the table last November, and rejected by Qualcomm. That deal works out to $70 a share and consists of $10 in Broadcom stock and $60 in cash for every share of Qualcomm. Broadcom is reportedly considering a new bid worth between $80 and $82 dollars a share. There is no indication how much cash will be included in a revised offer.

In addition to raising the value of its bid, Broadcom is said to be enticing Qualcomm to go along with the acquisition by raising the value of the break-up fee, which is normally 3% to 4% of the total size of a transaction. Broadcom will pay the higher fee to its target if a deal is rejected by U.S. regulatory agencies.

UPDATE: Broadcom has officially raised its bid for Qualcomm to $82 per share. The new deal keeps the stock component at $60. The cash portion of the transaction has been hiked to $22 for a gain of $12, or 24% from the first bid. Broadcom says that this is the "best and final offer" for Qualcomm. Despite the raised bid, Qualcomm shares are down 2.65% this morning after top ranked analyst Ming-Chi Kuo said that Apple will no longer feature Qualcomm modems inside the CDMA iPhone models. Kuo says that Apple will use Intel modem chips on all 2018 models.

Qualcomm is well known for its Snapdragon mobile chips used in most smartphones around the world. The company is in the middle of litigation with Apple, and the latter could decide to drop the company and use another chip designer to deliver the modem chip for its 2018 CDMA iPhone models.

Qualcomm has told its shareholders that Broadcom's bid is an attempt to buy the company on the cheap. At the same time, some analysts have said that Qualcomm will probably cave if Broadcom were to raise its bid to $80 or more. If this new rumor is right, Broadcom will announce the higher offer on Monday. And then we will see if a bid at $80 or above is the magic number that Qualcomm will accept.

Not to be forgotten, Qualcomm just needs approval from Chinese regulatory agencies to close its deal to buy NXP Semiconductors NV for $38 billion. Last month, EU anti-trust regulators signed off on the deal. NXP is known for its NFC chips.

source: Reuters

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10 Comments

1. makatijules

Posts: 835; Member since: Dec 11, 2017

Qualcomm don't sell. Doing so would be the worse move ever. Broadcom will only stifle competition and raise prices.

2. Dr.Phil

Posts: 2441; Member since: Feb 14, 2011

Part of the reason there is mostly Qualcomm chips on US smartphones is because of their anticompetitive practices. Qualcomm has made it their prerogative to wipe out the competition instead of just merely making competitive products. In certain markets they hold a monopoly on chipsets that are made. So I don’t think Broadcom would make it any worse. Also, just as a side note, the same EU Commission that brought several lawsuits against Qualcomm for anticompetitive behavior is the same one that signed off on this deal. That should tell you something.

3. Anonymous.

Posts: 423; Member since: Jun 15, 2016

Well, if this deal goes through, Broadcom would have made a huge investment. So it's logical to assume Broadcom would stiffle the competition even worse than Qualcomm ever did in order to rip the fruits of it's investment ASAP.

5. Back_from_beyond

Posts: 1438; Member since: Sep 04, 2015

And don't forget the rumors that Apple is supposedly pushing Broadcom towards this acquisition, most likely to then acquire Qualcomm's modem tech via Broadcom so they can eliminate their dependency on both Qualcomm and Intel and make their own.

9. cheetah2k

Posts: 2271; Member since: Jan 16, 2011

Anti-trust right there. Typical Apple. Swinging via the back door - just how Tim Cock loves it

6. sgodsell

Posts: 7437; Member since: Mar 16, 2013

Broadcom in the past has been closed when it comes to drivers. More so than Qualcomm. Also with the 38 billion dollar purchase of NXP. Means it's worth more than what Broadcom is trying to buy at.

7. makatijules

Posts: 835; Member since: Dec 11, 2017

I disagree. They simply make the best option and when you have the best you price accordingly. You're complaining about Qualcomm costs that you don't directly pay. Yet Apple who charges 3 times the cost it takes to make their phone and they don't even want to it the price they agreed too. They have other options. They have Intel and MediaTek who simply make slower less fella me options. When you want the best you have to pay What it costs. Qualcomm doesn't have anyone backed into a y corner. You want the best and fastest most compatible modem, they have it. They draw. Contract. You either say yes or no.

8. cheetah2k

Posts: 2271; Member since: Jan 16, 2011

Anti-competitive? If they have the patents, then royalties must be paid. If not, use someone else's technology.. I'm surprised Apple hasn't been hit with anti-competitive anti-trust suites considering how they muscle their music side of the business around. Anyways, we all know Apple is the USA's sugar daddy.. nothing will ever be done - even the CPU throttling tricks have seemingly disappeared from the headlines.

10. xfire99

Posts: 1206; Member since: Mar 14, 2012

I hopes they buy doesnt goes through. If all big companies buys up smaller ones. Then there wont be any competitive left and only monopoly. They can decide any price they want and consumers will lose on it.

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