Broadcom Offers to Acquire Qualcomm for $103 Billion

Chipmaker Broadcom seeks to acquire Qualcomm

"Chipmaker Broadcom officially unveiled a $130bn offer, including net debt, for Qualcomm on Monday, in what could be the largest tech deal in history".

"This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products", Hock Tan, resident and chief executive officer of Broadcom, said in a statement Monday.

Qualcomm, based in San Diego, said that it is reviewing the bid, and that it will have no comment until that review is completed by its board. The proposed transaction is valued at approximately $130 billion on a pro forma basis, including $25 billion of net debt, giving effect to Qualcomm's pending acquisition of NXP on its now disclosed terms.

"We would not make this offer if we were not confident that our common global customers would embrace the proposed combination", Tan said in a company release Monday.

Specifically Broadcom is offering to pay $70.00 per Qualcomm share, with $60.00 being in cash and $10.00 per share in Broadcom shares. The combined Broadcom and Qualcomm, including NXP, will have pro forma fiscal 2017 revenues of approximately $51 billion and pro forma 2017 EBITDA of approximately $23 billion, including synergies.

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The deal represents a 28% premium to Qualcomm's share price prior to rumors of the deal which sent the stocks higher last week. There has been regulatory scrutiny for that deal in Europe, as well as reported objections from NXP stakeholders.

Qualcomm is also attempting to close its acquisition of NXP Semiconductors NV, one of the largest makers of chips for vehicles. We will maintain our fair value estimates of $68 for narrow-moat Qualcomm and $203 for narrow-moat Broadcom, but we would probably raise our fair value estimate for Broadcom-perhaps as much as 25%-if a definitive deal were reached. Broadcom primarily focusses on Wi-Fi and Bluetooth chips.

Broadcom has been trying to get regulatory approval for its purchase of Brocade Communications Systems Inc since 2016.

Broadcom plans to move its headquarters exclusively to the United States, which would allow it to avoid review by the Committee on Foreign Investment in the United States, which reviews foreign ownership of USA assets.

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