Broadcom Offers Hostile $130 Billion Deal To Buy Qualcomm In Largest Tech Acquisition In History

As was leaked by Bloomberg on Friday afternoon, this morning communications chipmaker Broadcom, which just last week announced it would move its headquarters from Singapore to the US (to make any future mega deals easier) said it offered to buy smartphone chip supplier Qualcomm Inc for $70 per share in a transaction valued at $130 billion, including $25 billion net debt, in what would be the biggest technology acquisition ever.

Broadcom's bid consists of $60 in cash and $10 in shares, representing a 28% premium to QCOM's closing price on Thursday, a day before media reports of a potential deal pushed up the company's shares. The deal values Qualcomm’s equity at roughly $103bn.

The proposal stands whether Qualcomm’s pending NXP deal is consummated on currently disclosed terms of $110/shr or if deal is terminated. Silver Lake Partners has provided $5b convertible debt financing commitment letter to support transaction.

A tie-up would combine two of the largest makers of wireless communications chips for mobile phones and, as Reuters adds, raise the stakes for Intel, which has been diversifying into smartphone technology from its stronghold in computers.

In a letter to Qualcomm, Broadcom CEO Hock Tan said the “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."

If concluded, the hostile deal would be the biggest ever takeover in the technology sector and create a company with a combined market capitalisation of more than $200bn.

The full press release below:

Broadcom Proposes to Acquire Qualcomm for $70.00 per Share in Cash and Stock in Transaction Valued at $130 Billion

  • Broadcom Proposal Stands Whether Qualcomm's Pending Acquisition of NXP is Consummated on the Currently Disclosed Terms of $110 per Share or the NXP Transaction is Terminated
  • Broadcom and Qualcomm, Including NXP, Will Have Pro Forma Fiscal 2017 Revenues of Approximately $51 Billion and EBITDA of Approximately $23 Billion, Including Synergies
  • Delivers Immediate, Substantial and Compelling Premium for Qualcomm Stockholders
  • Silver Lake Partners Provides $5 Billion Convertible Debt Financing Commitment Letter to Support Transaction

Broadcom Limited (AVGO) ("Broadcom"), a leading semiconductor device supplier to the wired, wireless, enterprise storage, and industrial end markets, today announced a proposal to acquire all of the outstanding shares of Qualcomm Incorporated (QCOM) ("Qualcomm") for per share consideration of $70.00 in cash and stock.

Under Broadcom's proposal, the $70.00 per share to be received by Qualcomm stockholders would consist of $60.00 in cash and $10.00 per share in Broadcom shares. Broadcom's proposal represents a 28% premium over the closing price of Qualcomm common stock on November 2, 2017, the last unaffected trading day prior to media speculation regarding a potential transaction, and a premium of 33% to Qualcomm's unaffected 30-day volume-weighted average price. The Broadcom proposal stands whether Qualcomm's pending acquisition of NXP Semiconductors N.V. ("NXP") is consummated on the currently disclosed terms of $110 per NXP share or the transaction is terminated. 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 currently disclosed terms.

"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."

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