SAN FRANCISCO — Broadcom Ltd. launched an unsolicited takeover bid to acquire larger rival Qualcomm for roughly $103 billion in what would be the largest tech acquisition ever.
Broadcom said it would offer $70 per share to acquire Qualcomm, the largest maker of mobile phone chips, a 28 percent premium over Qualcomm's closing stock price on Nov. 2, the day before reports that Broadcom was planning a takeover offer surfaced. Broadcom did not approach Qualcomm to discuss the deal prior to launching the bid, according to reports.
The magnitude of the deal would be difficult to overstate, even in a period of unprecedented consolidation for the semiconductor industry. Qualcomm itself is still in the process of trying to close a deal for European chip maker NXP Semiconductors — first announced a year ago — which is to date the largest announced semiconductor firm acquisition.
A combined Qualcomm, NXP and Broadcom could have total semiconductor sales of $40 billion, making it the third largest chip company ahead of TSMC but below Samsung and Intel, according to Rob Lineback of market watcher IC Insights. Such a deal would make 2017 the largest on record in semiconductor mergers with an estimated value of $120 billion including a reported merger proposal between Cavium and Marvell, he added.
"This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products," said Hock Tan, Broadcom's president and CEO, in a press statement.
Qualcomm said its board of directors would assess the proposal in consultation with financial and legal advisors. The company said it would not comment further on the proposal until the board completed its review.
Analysts reached by EE Times expressed some doubts that an acquisition of Qualcomm by Broadcom makes sense or would pass the muster with regulators.
"While it's feasible, it would not be possible at this time with the NXP deal under review," said Jim McGregor, principal analyst at Tirias Research. "I also have serious doubts about it, and it would face regulatory scrutiny."
Regulators around the world would closely scrutinize several product areas including Wi-Fi, Bluetooth, and other RF chips, as well as some embedded processing segments if the Qualcomm acquisition includes NXP, said Lineback.
Thomas Krause, Broadcom's chief financial officer, said that given the "complementary nature" of the firms' products "we are confident that any regulatory requirements necessary to complete a combination with Qualcomm will be met in a timely manner."
Handel Jones, CEO of International Business Strategies Inc. (IBS), a Los Gatos, Calif.-based consulting firm, said NXP might be what Broadcom is most interested in. "There would be good synergy between Broadcom and NXP," he said.
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