Published: Tue, February 06, 2018
Tech | By Constance Martin

Broadcom increases Qualcomm acquisition offer to $121 billion Dollars

Broadcom increases Qualcomm acquisition offer to $121 billion Dollars

Before reports of Broadcom's US$70-a-share offer in November, Qualcomm's stock had been trading at less than US$55, partly because of worries that its earnings would continue to be hurt by customers such as Apple refusing to pay.

Qualcomm (San Diego) said in a statement that it's board would review Broadcom's proposal with legal and financial advisors.

Broadcom (AVGO) on Monday raised its bid to buy wireless-chip maker Qualcomm (QCOM) by 17% to $82 a share, calling the deal its "best and final offer". The offer represents a 50 percent premium over the value of Qualcomm's stock on November 2, the last day before reports surfaced that Broadcom would bid to acquire the company.

Broadcom said it is very confident that a deal can be reached within 12 months of signing an agreement.

In a letter to Qualcomm board members, Broadcom chief executive Hock Tan called the offer "extremely compelling compared to any other alternative available to Qualcomm" and called on the board to open talks on the proposal. The company also said its offer is contingent on Qualcomm holding its annual meeting as scheduled on March 6.

Broadcom recently made an unsolicited $105 billion offer to acquire Qualcomm even though the chipmaker isn't up for sale. Broadcom also said it would pay Qualcomm a significant fee in "the unlikely event we are unable to obtain required regulatory approvals".

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Elsewhere in the Broadcom world, the company has said it expects to have a positive Q1 finishing in the top-end of expectations.

The price hike steps up the pressure on California-based Qualcomm, the dominant producer of chips for mobile devices, which is set to hold its annual shareholders meeting next month. Gator Capital Management LLC purchased a new position in shares of Broadcom in the 4th quarter valued at about $488,000. And Broadcom offered to keep Paul Jacobs, son of co-founder Irwin Jacobs, and one other current Qualcomm director on the board of the combined company.

Broadcom, meanwhile, launched a hostile takeover attempt for Qualcomm in December, advancing a slate of candidates for election to Qualcomm's board.

Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, said Broadcom had to increase its bid after Qualcomm gave a new quarterly forecast that reflected its success in chips used in areas such as automobiles and the internet of things.

Its new $145bn offer is equivalent to that of $80-82 per share, a rather dramatic increase in a distinctly aggressive push from one rival company to another.

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