Chipmaker Broadcom bids $130bn for rival Qualcomm

Chipmaker Broadcom bids $130bn for rival Qualcomm

Chipmaker Broadcom bids $130bn for rival Qualcomm

Broadcom's offer represents a premium of 27.6 percent to Qualcomm's closing price of $54.84 on Thursday, a day before media reports of a potential deal pushed up the company's shares.

But President Donald Trump appeared with Broadcom's chief Mr Tan last week, saying the company will relocate its legal base to the United States - a move which is expected to free Brocade's bid from the CFI review.

The news sent Qualcomm's NASDAQ shares up 4.5% in early trading.

Since publication Broadcom and Qualcomm have confirmed the offer, with Broadcom disclosing that the bid of $70 a share is made up of $60 cash and $10 in Broadcom shares. 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", Mr Tan said.

However, the Financial Times reports two unnamed sources who claim that Qualcomm's shareholders could be set to reject the takeover, claiming the valuation is too low and the merger would face significant regulatory challenges.

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Publicly, Qualcomm has only said it is "evaluating" the deal.

"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". Broadcom already provides designs for Wi-Fi and Bluetooth chips, and by bringing in Qualcomm it will be able to encompass LTE and 5G capabilities.

Qualcomm provides chips to carrier networks to deliver broadband and mobile data and is also in the process of closing a US$38 billion bid for automotive chipmaker NXP Semiconductors NV that it made a year ago.

The bid comes as Broadcom plans to move its headquarters to the United States from Singapore.

Qualcomm said in a statement Monday morning that it had received the offer and its board of directors would be reviewing it.

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