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Broadcom plans to raise Qualcomm bid

by on05 February 2018


$120 billion offer

Broadcom plans to unveil a new  $120 billion offer for Qualcomm in an attempt to pressure the US rival to the negotiating table.

The move comes ahead of a Qualcomm shareholder meeting scheduled for March 6, when Broadcom is seeking to replace Qualcomm’s board of directors by nominating its own slate for election.

Broadcom is scheduled to meet with its advisers later to finalise an offer that values Qualcomm between $80 and $82 per share, two of the sources said. Broadcom’s previous $70 per share offer consisted of $60 per share in cash and $10 per share in stock.

Broadcom plans to offer Qualcomm a higher-than-usual breakup fee in the event regulators thwart the deal, according to the sources. Typically, such break-up fees equate to approximately three percent to foue percent of a deal’s size.

All this is off the record and Broadcom Chief Executive Officer Hock Tan may decide to significantly change the terms at the last minute.

Broadcom has said it is very confident a deal can be completed within a year of signing an agreement. Qualcomm has said that the regulatory review processes required around the world would take more than 18 months and be fraught with risks. Already Chinese companies have dropped hints to their politicians that they will be in trouble dealing if such a super company is formed.

Qualcomm has told its shareholders that Broadcom’s hostile bid is aimed at acquiring the company on the cheap.

Qualcomm reported quarterly profit and revenues last week that beat analysts’ expectations as demand surged for its chips used in smartphones and cars.

Qualcomm is also trying to clinch an acquisition of its own, proposing to buy NXP Semiconductors NV for $38 billion. The deal was approved by European Union antitrust regulators last month, and only China has yet to approve it. Qualcomm expects the government’s blessing later this month.
The NXP deal still faces an uncertain future as some of its shareholders, including activist hedge fund Elliott Management, have asked Qualcomm to raise its offer. Qualcomm is expected to make a decision later this month.

Last modified on 05 February 2018
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