Broadcom makes offer to acquire Qualcomm in record $105bn deal

Reports suggest that Broadcom would not go over Qualcomm's offer of $110 per share to acquire NXP, so it may add urgency to NXP investors to close the deal after all. We will maintain our fair value estimates of $68 for narrow-moat Qualcomm and $203 for narrow-moat Broadcom, but we would probably raise our fair value estimate for Broadcom-perhaps as much as 25%-if a definitive deal were reached.

Since publication Broadcom and Qualcomm have confirmed the offer, with Broadcom disclosing that the bid of $70 a share is made up of $60 cash and $10 in Broadcom shares.

Still, analysts expect Qualcomm management to reject the $70-per-share price Broadcom is offering as too low.

Broadcom today (6 November) revealed a $105bn takeover bid for Qualcomm, a move that would see the creation of a giant in the chip-making world.

Broadcom also is waiting on regulatory approval to purchase San Jose's Brocade Communication Systems for $5.9 billion.

Shah believes Broadcom would encourage Qualcomm to complete its NXP acquisition as it has extensive distribution channels, scale and exposure to the fastest growing segments in automotive, where Broadcom is underpenetrated.

Qualcomm shares rose up by 3.6 percent in premarket trading this Monday in NY.

Broadcom is working with five financing banks to offer a significant cash component for its bid, according to one of the sources. U.S. President Donald Trump commented on the move on Thursday at a White House event where Chief Executive Hock Tan cited Republican tax efforts.

Antitrust concerns over a Broadcom-Qualcomm deal also may be muted because the companies have few areas of overlap beyond Wi-Fi solutions for wireless routers, Bluetooth drivers and some RF semiconductors, said Rob Lineback, a research analyst at IC Insights.

  • Latoya Cobb