Broadcomm, a leading chip supplier to the wired, wireless, enterprise storage, and industrial end markets today announced an unsolicited offer to buy Qualcomm. If the deal goes through successfully, it would be the largest technology acquisition ever. The proposed transaction is valued at approximately $130 billion.
Under Broadcom’s proposal, Qualcomm stockholders would receive per share and it will consist of $60.00 in cash and $10.00 per share in Broadcom shares. This price represents a 28% premium over the closing price of Qualcomm stock on November 2, 2017. Broadcom mentioned that their proposal stands whether Qualcomm’s pending acquisition of NXP Semiconductors is consummated on the currently disclosed terms of $110 per NXP share or the transaction is terminated.
Broadcom highlighted the below as the strategic and financial benefits of this proposal,
- Creates a Leading Diversified Communications Semiconductor Company: Qualcomm’s cellular business is highly complementary to Broadcom’s portfolio, and the combination will create a strong, global company with an impressive portfolio of technologies and products.
- Accelerates Innovation to Deliver More Advanced Semiconductor Solutions to Global Customers: As a result of enhanced scale, reach and financial flexibility, the combined company will benefit from the ability to accelerate innovation and deliver more advanced semiconductor solutions to its broad global customer base.
- Compelling Financial Benefits: The combined company will have an enhanced financial profile, benefiting from Broadcom’s proven operating model with industry-leading margins.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. The transaction is expected to be accretive to Broadcom’s Non-GAAP EPS in the first full year after close.
“Broadcom’s proposal is compelling for stockholders and stakeholders in both companies. Our proposal provides Qualcomm stockholders with a substantial and immediate premium in cash for their shares, as well as the opportunity to participate in the upside potential of the combined company,” said Hock Tan, President and Chief Executive Officer of Broadcom. “This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products. We would not make this offer if we were not confident that our common global customers would embrace the proposed combination. With greater scale and broader product diversification, the combined company will be positioned to deliver more advanced semiconductor solutions for our global customers and drive enhanced stockholder value.”
Learn more about this proposal here.