Broadcom Ltd. offered about $105 billion for Qualcomm Inc., kicking off an ambitious attempt at the largest technology takeover ever in a deal that would rock the electronics industry.
Broadcom made an offer of $70 a share in cash and stock for Qualcomm, the world’s largest maker of mobile phone chips. That’s a 28 percent premium over the stock’s closing price on Nov. 2, before Bloomberg first reported talks of a deal. The proposed transaction is valued at approximately $130 billion on a pro forma basis, including $25 billion of net debt.
Buying Qualcomm would make Broadcom the third-largest chipmaker, behind Intel Corp. and Samsung Electronics Co., The combined business would instantly become the default provider of a set of components needed to build each of the more than a billion smartphones sold every year. The deal would dwarf Dell Inc’s $67 billion acquisition of EMC in 2015 — then the biggest in the technology industry.
“The combination of the two companies could generate strong synergies and create a dominant wireless business and overall powerful global semiconductor leader,” said Mike Walkley, an analyst at Canaccord Genuity to Bloomberg.
Qualcomm is preparing to fend off the unsolicited offer, arguing it undervalues the company, people familiar with the plans have said. Qualcomm will argue that the proposal is an opportunistic move to buy the chipmaker on the cheap, the people said, and it will likely recommend that shareholders reject it. In a statement Monday, Qualcomm said it would “assess the proposal in order to pursue the course of action that is in the best interests of Qualcomm shareholders.”
The bid values Qualcomm at about 21.2 times earnings before interest, tax, depreciation and amortization, compared with a median multiple of 22.5 for similar deals in the industry, according to data compiled by Bloomberg.
