U.S.-based semiconductor manufacturer Broadcom has issued an unprecedented offer to acquire chip manufacturer Qualcomm.
According to a November 6th, 2017 media release, Broadcom has offered to acquire Qualcomm in a deal that would generate approximately $103 billion USD (roughly $131.6 billion CAD) in both cash and stock options.
“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, Broadcom’s president and CEO, in the same November release.
According to Qualcomm — which issued its own release about the offer — Broadcom’s proposal is “non-binding” and “unsolicited,” meaning that neither company had previously discussed this transaction.
Broadcom also clarified that the offer would stand whether Qualcomm merges with Dutch semiconductor manufacturer NXP Semiconductors or not.
The Broadcom release also lends some insight into why specifically Broadcom is making this offer. Of course, a Broadcom-Qualcomm merger would mean that both companies would greatly benefit from the company’s sheer presence in the semiconductor market.
However, Broadcom also clarified that “Qualcomm’s cellular business is highly complementary to Broadcom’s portfolio,” suggesting that Broadcom is looking to expand its presence in the wireless industry.
Several device manufacturers — including Samsung, HTC and LG — already use Broadcom Wi-Fi chips. Qualcomm’s portfolio not only includes the major Android manufacturers, but also currently includes global computing giant Apple.
Of course, Apple’s relationship with Qualcomm has been rocky for some time now, and new rumours suggest the companies could terminate their relationship sometime next year.
For its part, Qualcomm has remained tight-lipped about whether it will accept or reject Broadcom’s offer.
“The Qualcomm Board of Directors, in consultation with its financial and legal advisors, will assess the proposal in order to pursue the course of action that is in the best interests of Qualcomm shareholders,” reads an excerpt from Qualcomm’s November 6th, 2017 media release. “Qualcomm has significant opportunities to drive substantial additional value for its shareholders as its technology and product roadmap move into new industries.
