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Broadcom Offers Qualcomm $130 Billion In Takeover Bid

The Qualcomm headquarters building in San Diego, Nov. 2, 2011.

Photo by Associated Press

Above: The Qualcomm headquarters building in San Diego, Nov. 2, 2011.

Broadcom Offers Qualcomm $130 Billion In Takeover Bid

GUEST:

Mike Freeman, reporter, The San Diego Union-Tribune

Transcript

The electronics company Broadcom Ltd. offered San Diego-based Qualcomm Inc. about $130 billion Monday in an unsolicited takeover bid, Broadcom president and CEO Hock Tan said, and Qualcomm said it would think about it.

Rumors of the potential deal first surfaced last week, when it was reported Broadcom would offer $70 per share in cash and stock for Qualcomm, the world's largest maker of mobile phone chips. That $70 per share figure was confirmed Monday by Tam.

"This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products," Tan said in a statement this morning. "We would not make this offer if we were not confident that our common global customers would embrace the proposed combination."

Video by Katie Schoolov

Broadcom is incorporated and currently based in Singapore, but Tan announced last week while visiting President Donald Trump at the White House that the company would return its corporate headquarters to the U.S., using San Jose as a base.

Buying Qualcomm would make Broadcom the third-largest chip-maker, behind Intel Corp. and Samsung Electronics Co., Bloomberg reported. The combined business would become the default provider of a set of components needed to build each of the more than a billion smartphones sold every year, according to Bloomberg.

In a statement Monday, Qualcomm said it would "assess the proposal in order to pursue the course of action that is in the best interests of Qualcomm shareholders."

Bloomberg reported that Qualcomm "is preparing to fend off the unsolicited offer" because it undervalues the company and is an opportunistic move to buy it on the cheap. Management will recommend that shareholders reject the takeover bid, according to Bloomberg.

Like Qualcomm, Broadcom is a major supplier of parts of Apple products. Qualcomm and Apple have been embroiled in a court dispute over royalties.

Qualcomm last week reported a plunge in net earnings for the fourth quarter — to $168 million, or 11 cents per diluted share, compared to $1.6 billion, or $1.07 per diluted share, in the same period in 2016. For the full fiscal year, net income was $2.47 billion, or $1.65 per diluted share, compared to $5.7 billion, or $3.81 per diluted share, last year.

The impact in San Diego of the potential takeover — which would end up being the largest ever in the electronics industry — wasn't immediately clear, but it could be tremendous. Qualcomm is one of the few major corporations with a global reach to be headquartered in a city known mainly for tourism, and smaller defense and life sciences firms.

Qualcomm is one of the region's largest private employers, and the family of co-founder Irwin Jacobs are one of the area's most generous philanthropists.

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