Broadcom offers to buy Qualcomm for $130B

A sign is posted at a Qualcomm office on November 1 in San Jose California. – AFP

As of Monday, shares of Qualcomm are still about 8% lower than the $70 per share offer price.

Such a massive deal has the potential to invite scrutiny from regulators, but Broadcom CEO Hock Tan said in a letter to Qualcomm that he was confident that the transaction would not raise any red flags for antitrust enforcers.

Broadcom today (6 November) revealed a $105bn takeover bid for Qualcomm, a move that would see the creation of a giant in the chip-making world.

It is likely that Qualcomm will reject the bid, as it believes that its value is far below what the company is worth.

Buying Qualcomm would make Broadcom the third-largest chipmaker, behind Intel Corp. and Samsung Electronics Co.

"The combined company will be positioned to deliver more advanced semiconductor solutions for our global customers and drive enhanced stockholder value", he added.

Qualcomm is trying to close its $38-billion acquisition of NXP Semiconductors NV, one of the largest makers of chips for vehicles and expanding into self-driving technology.

Broadcom released details of its proposed takeover of Qualcomm on Monday, and shares of both companies are rising on the news.

Broadcom is looking to complete its $5.5 billion purchase of Brocade Communications Systems Inc (BRCD.O) while Qualcomm is in the process of closing its deal for NXP.

Qualcomm's share price rose as much as 14 per cent when the news broke.

The proposed deal comes at a time when there has been significant consolidation within the chipset market, driven by greater demand for smartphones and connected devices. Broadcom primarily focusses on Wi-Fi and Bluetooth chips.

Broadcom said its proposal stands irrespective of Qualcomm's acquisition of NXP goes through or not.

Broadcom said if the deal is approved, it expected a combined company to have revenues of about $51 billion.

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