Broadcom Offers Qualcomm $130 Billion In Takeover Bid
Today Qualcomm Stadium confirmed that they have received a bid from chipmaker Broadcom in Singapore to buy out the company. They are offering $103 billion in 20 me is Mike Freeman who covers technology for the San Diego Union-Tribune. Welcome to the program.Thank you.We been hearing about this deal since Friday. It is the largest with 13,000 local workers. What we know about the offer?We know that they are offering $60 a share in cash and $10 in stock. The idea behind that is it allows investors to benefit in some upside if they keep the shares. We know that this is just in the beginning. It has to get -- they are going to examine the offer considers unsolicited. May reject it as being too low or inadequate. Then it would be up to Broadcom to take the next step.I've seen this offer referred to as a hostile takeover. Is a?That is a difficult question for me to answer. You would think that perhaps it could be viewed as a hostile takeover offer. It depends if the board rejects the offer and Broadcom takes the next step in pursuing a fight trying to get shareholders to allow them to make the purchase, then it is hostile.Broadcom announced that they are relocating the headquarters to the U.S. Does that seem to be part of the strategy to acquire Qualcomm Stadium?Is sure does. It would make it easier for regulatory approval on this deal although regulatory approval will be difficult because it is global and you're going to have to get through the European Union and China on this. That probably won't be a small thing to do. For U.S. regulators having them relocate or instead of having a headquarters in the U.S. and Singapore have them have their main quarters in the U.S. might make it easier to achieve approval in the U.S.This comes as Qualcomm Stadium has been in a nasty legal data with Apple. Do we know where Apple might stand on this bed?No, they have not commented. We don't know for sure. There is much speculation from the analyst community that a Broadcom take over that she would be perhaps more willing to settle their dispute on more favorable terms to Apple then the qualcomm current management would be willing to do. Broadcom is a big supplier to Apple. So this patent dispute might not be as core to Broadcom as it is to qualcomm.The next step in this is to hear what Holcomb says about whether or not they want to accept this offer.They have duty to consider it. Their Board of Directors and financial advisors will go over and see if they think it is adequate. If they don't, then they will reject the offer and then the ball shifts back to Broadcom and then whether it want to try to independently convince shareholders that $70 a share is a great offer and you should take it now because the risk around Qualcomm Stadium with the Apple dispute and with some competitors getting into the market make your chances of achieving more than this offer long-term not very good. Qualcomm Stadium will counter that we are the leading technology supplier and be a leader in that. You're seeing that technology bleed into other agencies like automotive, healthcare. This great growth opportunities long-term if you stick with us.Had been speaking with Mike Freeman with the San Diego Union-Tribune. Thank you.Thank you.
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."
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.