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November 6, 2017 1:45 PM, EST
Qualcomm Confirms Broadcom’s $100 Billion Buyout Offer
Qualcomm

Qualcomm confirmed Nov. 6 that it received a buyout offer from Broadcom of $70 a share in cash and stock.

If accepted, such a deal would be the biggest ever in the semiconductor industry.

Qualcomm said in a statement that Broadcom’s unsolicited offer consisted of $60 a share in cash and $10 a share in Broadcom’s stock.

Qualcomm’s board and financial advisers will examine the deal. The company would not comment further.

The offer is likely to face tough scrutiny from global regulators.

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“This deal would give Broadcom a leading position in virtually every high-value semiconductor socket in a smartphone,” Bernstein Research Analyst Stacy Rasgon said in a note to clients,

It also sets up a tough decision for Qualcomm’s board and shareholders of whether to accept an offer now that would value the company at over $100 billion, or hang on to hopes that new 5G wireless networks and the expansion of cellular technologies into automotive, health care, “internet of things” and other businesses beyond smartphones would result in an even higher value in the long term.

The deal would combine two of the largest makers of wireless communications chips for mobile phones and create a company with a combined market capitalization of more than $200 billion.

The bid for Qualcomm came just days after reports that Broadcom’s Hock Tan was consulting with financial advisers about an unsolicited bid and after Tan held a news conference with President Donald Trump to announce that Broadcom, currently based in Singapore, plans to move its corporate domicile to the United States.

The deal is the most ambitious move by Tan, who is known for adding to his companies through acquisitions and cost-cutting.

Tan, a native of Malaysia, has headed several tech companies, including Emulex Corp., Integrated Circuit Systems, Inc. and Avago Technologies.

“We would not make this offer if we were not confident that our common global customers would embrace the proposed combination,” Tan said in a statement.

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

Broadcom’s offer stands whether the pending NXP transaction is completed or not, the company said.

Antitrust officials, who also would have to approve a Broadcom-Qualcomm deal, are still considering Qualcomm’s purchase of NXP.

Qualcomm has approval from five global regulators but is waiting on reviews in Europe, China, South Korea and Japan. Activist NXP shareholders have been lobbying NXP to seek a higher price from Qualcomm.

San Diego-based Qualcomm is in a legal battle with Apple over patent royalties, and hefty fines and lawsuits from anti-monopoly regulators in the U.S., South Korea and Taiwan.

Those troubles weighed heavily on Qualcomm’s full fiscal year earnings released last week of $22.3 billion in sales and profit of $1.65 billion, down 57% from previous prior year.

Buying NXP would diversity Qualcomm beyond smartphones – pushing it into automotive micro-controllers, near field communications, internet of things and other new markets.

On the other hand, Qualcomm and Broadcom compete on several fronts, including Wi-Fi and Bluetooth technology and radio frequency front-end transceivers/amplifiers.

Broadcom was created last year when Tan’s Avago Technologies bought Irvine, Calif.-based Broadcom for $37 billion, and then adopted the Broadcom name for the combined company.

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