Broadcom offers $103 billion for Qualcomm, sets up takeover battle

Broadcom offers $103 billion for Qualcomm, sets up takeover battle

Broadcom offers $103 billion for Qualcomm, sets up takeover battle

Buying Qualcomm would make Broadcom the third-largest chipmaker, behind Intel Corp. and Samsung Electronics Co.

The company said Monday that it would not have pushed forward with the proposed buyout if it was not confident that its global customers "would embrace".

A Broadcom-Qualcomm deal would create a dominant company in the market for supplying chips used in the 1.5 billion or so smartphones expected to be sold around the world this year.

Qualcomm is best known for being a supplier to Apple, but the two companies are now locked in a long-running legal dispute as the tech giant is refusing to pay any royalties owed to Qualcomm for some of the features in the iPhone.

Broadcom could spin out Qualcomm's licensing arm, QTL, to get regulatory approval and funding for the deal, Nomura Instinet analyst Romit Shah said.

William Blair's Anil Doradla also wrote Broadcom's recent decision to move its legal home from Singapore to the US would likely take a "more amiable approach toward handset industry players" and try to resolve Qualcomm's existing legal disputes.

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Broadcom Chief Executive Hock Tan, who turned a small, chipmaker into a US$100-billion company based in Singapore and the United States, told Reuters he would not rule out a proxy fight to convince shareholders to replace the board and accept the offer.

Broadcom has offered $70 per share (£53.40) for the firm, which it said represented a 28% premium over Qualcomm's closing share price on November 2, and offered to pick up $25 billion in debt (£19 billion).

"Broadcom's proposal is compelling for stockholders and stakeholders in both companies".

Citing sources, Bloomberg claimed that the Qualcomm board is likely to advise shareholders to reject the deal, while also claiming that any potential deal could run into regulatory problems.

While stocks closed up by 13 percent on last Friday at $61.84, valuating the company at $91 billion.

By relocating its legal home in the U.S., Broadcom can avoid the CFIUS process. It is now incorporated in Singapore and co-headquartered there and in San Jose, California.

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