Broadcom is reportedly planning on bidding more than $100 billion for Qualcomm on cash and stock basis. Broadcom is yet to take a final decision on its bid and if it does, the bidding offer will only be made in the coming days. If the deal goes through, it would be one of the biggest takeovers ever in the industry.
Even if the deal goes through, it will come under intense scrutiny in EU as the consolidated company will have a huge control over the supply chain of smartphone components.
Broadcom supplies various chips that are used in smartphones for connectivity or other purposes. The company lists Apple as one of its largest customers. It was initially founded as the semiconductor division of Hewlett-Packard (HP) before being separated from it as a part of Agilent Technologies in 1999. Broadcom, initially under Avago, has made a string of purchases over the last decade to strengthen its position as a semiconductor company and its patent portfolio.
Qualcomm, on the other hand, is known for primarily supplying mobile APs and baseband. The company is currently engaged in a fierce legal battle against Apple with both companies suing each other for billions of dollars. Apple has even gotten its suppliers to stop paying Qualcomm which is putting an additional stress on the company. The battle between the two is primarily about the high licensing fees which Qualcomm charges. Instead of charging it for the related part, the company decides on the fees based on the total price of the phone and the unit sold. This fees also kept increasing over the years which ultimately irked Apple.
Update : The press released today in which Qualcomm has received Broadcom's unsolicited offer to acquire all outstanding shares of Qualcomm for $60 per share, plus $10 per share in Broadcom stock. Qualcomm is consulting its financial and legal advisers before making any decisions and will issue no further comment until the company's board of directors has completed a review.
PRESS RELEASE
Qualcomm Confirms Receipt of Unsolicited Proposal from Broadcom
SAN DIEGO, Nov. 6, 2017 /PRNewswire/ -- Qualcomm Incorporated (NASDAQ: QCOM) ("Qualcomm" or the "company") today confirmed that it has received a non-binding, unsolicited proposal from Broadcom Limited (NASDAQ: AVGO) to acquire all of the outstanding shares of Qualcomm for per share consideration of $60.00 in cash and $10.00 in Broadcom stock.
The Qualcomm Board of Directors, in consultation with its financial and legal advisors, will assess the proposal in order to pursue the course of action that is in the best interests of Qualcomm shareholders. Qualcomm will have no further comment until its Board of Directors has completed its review.
Qualcomm's Board and management have continued to execute on its strategy to position the company for the next phase of profitable growth by making focused investments to extend its leadership in mobile into new opportunities, while maintaining financial discipline and a robust capital return program. Qualcomm has significant opportunities to drive substantial additional value for its shareholders as its technology and product roadmap move into new industries.
About QualcommQualcomm's technologies powered the smartphone revolution and connected billions of people. We pioneered 3G and 4G – and now we are leading the way to 5G and a new era of intelligent, connected devices. Our products are revolutionizing industries, including automotive, computing, IoT, healthcare and data center, and are allowing millions of devices to connect with each other in ways never before imagined. Qualcomm Incorporated includes our licensing business, QTL, and the vast majority of our patent portfolio. Qualcomm Technologies, Inc., a subsidiary of Qualcomm Incorporated, operates, along with its subsidiaries, all of our engineering, research and development functions, and all of our products and services businesses, including, our QCT semiconductor business. To learn more, visit Qualcomm's website, blog, Twitter and Facebook pages.
Qualcomm Contacts:Pete Lancia, Corporate CommunicationsPhone: 1-858-845-5959Email: corpcomm@qualcomm.com
John Sinnott, Investor RelationsPhone: 1-858-658-4813Email: ir@qualcomm.com
Source : Bloomberg