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Largest Ever Tech Deal Just Got Bigger: Broadcom Raises Qualcomm Bid To $82

Courtesy of ZeroHedge. View original post here.

In what it claims to be its "final offer", Broadcom on Monday confirmed that it had raised its price for fellow chip maker Qualcomm by about 17% to $82 a share, up from $70 previously – swelling the size of what would be the largest tech deal in history to about $121 billion.

According to the Wall Street Journal, which reported early today that Broadcom planned to raise its bid, investors and Wall Street analysts had expected Broadcom to submit a higher bid. Qualcomm shares closed at $66.07 on Friday, up 5.7% from their close on Nov. 6, when Broadcom made its first offer.

Speaking to WSJ, the price is reasonable, said Stacy Rasgon, an analyst with Bernstein Research.

“Even when the deal was first announced, many Broadcom shareholders – and I’d guess a lot of Qualcomm shareholders – had in mind a number with an ‘8’ in front of it,” he said of the per-share bid. Qualcomm didn’t immediately respond to a request for comment. Combined, the two companies would form the No. 3 chip maker by revenue, behind Intel Corp. and Samsung Electronics Co.

Qualcomm CEO Steve Mollenkopf had dismissed Broadcom’s earlier proposal of $70 per share, and the company has argued that, even if it accepted Broadcom's bid, the deal would almost certainly be quashed by international regulators.

Here's WSJ:

The new bid ratchets up the stakes in a hostile standoff that could affect wide swaths of the markets for chips used in data centers and smartphones. Broadcom is a market leader in a variety of chips for wired and wireless devices, including Wi-Fi and Bluetooth chips for smartphones. Qualcomm is a leader in chips that manage cellular communications in smartphones.

Qualcomm, in an effort to persuade shareholders to resist Broadcom’s initial bid, released a presentation mid-January outlining a path to grow adjusted per-share earnings from $4.28 in fiscal 2017 to between $6.75 and $7.50 in fiscal 2019.

It promised that in the event it doesn’t complete its proposed acquisition of NXP Semiconductors NV, which has been held up in regulatory reviews, it would create an equivalent boost to earnings by buying back shares. Qualcomm also promised to shed $1 billion in costs.

Qualcomm in a later letter to shareholders emphasized the difficulty of getting the proposed merger past international regulators regardless of Broadcom’s ultimate offer, saying it was “highly doubtful” the transaction would be approved.

Broadcom and Qualcomm discussed a potential deal as early as 2016, according to regulatory filings. Qualcomm is set to vote on Braodcom's nominations to its board next month.

With government and regulatory hurdles aplenty, and even QCOM pouring cold water on the deal's prospects, it is no surprise that QCOM stock is actually red on the news.

Meanwhile, in case the deal does pass, courtesy of CNBC here is a list of the world's biggest tech deals.


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