The takeover of Qualcomm has been announced – once it goes through, expect that more employees will decide that not selling their house is a good idea:
Broadcom Ltd. is considering a bid of more than $100 billion for Qualcomm Inc., according to people familiar with the matter, in what would be the biggest-ever takeover of a chipmaker.
Broadcom is speaking to advisers about the potential deal, said the people, who asked not to be identified because talks are private. The offer of about $70 a share would include cash and stock and is likely to be made in the coming days, the people said. A final decision on whether to proceed has not been made, they said.
Broadcom Chief Executive Officer Hock Tan is a voracious acquirer, and he’s played a key role in a wave of consolidation engulfing the $300 billion semiconductor industry over the last three years. Broadcom, created in 2016 when Avago Technologies Ltd. acquired Broadcom Corp. for $37 billion, has built itself from a former Hewlett Packard division into one of the largest chipmakers via a string of purchases. Tan has said he wants more deals, a strategy that could be limited by opposition from U.S. regulators.
Broadcom, a major supplier of iPhone parts that counts Apple among its largest customers, said this week it will return its headquarters to the U.S. from Singapore. The company already lists San Jose, California, as a corporate co-headquarters.
Qualcomm finds itself in a weakened state. A legal battle with Apple is costing revenue and jeopardizing a business model that for years made Qualcomm one of the most successful chipmakers. Before today, its shares had slumped 16 percent this year, compared with a 41 percent surge in the Philadelphia Semiconductor Index.
A change of management at Qualcomm might help resolve the dispute with Apple more quickly, and thereby make Qualcomm’s licensing and chip businesses more valuable, according to Sanford C. Bernstein & Co. analyst Stacy Rasgon. Earlier this week, Qualcomm executives said the legal process would “proceed under the court’s schedule,” indicating no resolution soon.
“Maybe they have a better relationship with Apple, maybe they settle,” Rasgon said.
At issue between Qualcomm and Apple are licensing fees the chipmaker charges for patents that cover the basics of how mobile phone systems work. Apple contends Qualcomm is unfairly charging too much and illegally taking advantage of its market position in chips. Qualcomm has countered that Apple, one of its largest customers, has lied to regulators in an unfair attempt to bully its opponent into charging less.
Qualcomm, based in San Diego, is also confronting headwinds in closing its $47 billion purchase of NXP Semiconductors NV. The deal is facing regulatory scrutiny in Europe and opposition from some shareholders including activist hedge fund firm Elliott Management Corp., which has argued the offer undervalues NXP.