If things fall in place right, Broadcom with a bid of $130 billion may make the biggest acquisition in the techno world. If the deal takes place then Broadcom will become the 3rd largest of chipmakers just behind Intel and Samsung. This will result in a major shift in the power of Broadcom in the technology world. Qualcomm being one biggest of manufacturers of Mobile modems and SoC’s is a giant in prospects of its market presence. Right from the chipsets found in Apple products to the Snapdragon processor series found in almost every other android phone on the planet. Qualcomm also holds many patents relating to the former as well as wireless networking. Amidst the ongoing fight between Qualcomm and South Korean and Taiwanian lawsuits on anti-trust issues and also with Apple over product licensing and usage, Broadcom seems to be hitting a hammer on the iron while it’s hot.
According to Bloomberg, Qualcomm is in the process of assessment of the offer being made to it. The offer put forth by Broadcom consists of $105 billion on the acquisition and ($25 billion on debts). As Apple sues Qualcomm over royalty issues claiming that the latter was charging extortion level royalties over its replacement with Intel in a few devices. Allegedly Qualcomm is said to have Withheld around a billion dollars as extortion amount.
This recent spat with Apple already pushed the company in weaker positions in market shares, while Broadcom offers to buy shares at the rate of $70 in cash and stock which in turn is around 28% premium over the stock price of Qualcomm. But as the Bloomberg reports state that,” Qualcomm’s gonna argue about the proposal being a rather cheap one, and the shareholders are gonna reject it. Shareholders seem to take a dig at the offer price for each share being low. They want it to be around $90-100 to be perfect.” Right now Qualcomm shares float at around $63 with a rise of 2-3% due to the implications of the deal being offered while those of Broadcom kinda declined by a percent. Along with this, there’s another deal going on with Qualcomm’s ongoing efforts to acquire NXP under current term of $110 per NXP share
While the Broadcom offer stands irrespective of Qualcomm in a process of acquiring NXP. Let us wait to see whether the world gets to see the gigantic technology based acquisition in coming days or not, but this sure is shaking the markets of the shareholders of both the companies.