Technology

Broadcom bids $130 Billion to acquire Qualcomm

Broadcom bids $130 Billion to acquire Qualcomm

It's not a done deal, however.

Citing sources, Bloomberg claimed that the Qualcomm board is likely to advise shareholders to reject the deal, while also claiming that any potential deal could run into regulatory problems. 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.

And a premium of 33 per cent on Qualcomm's "unaffected 30-day volume-weighted average price".

Intel shares fell 1.6 percent to $46.34.

Qualcomm is now trying to close its pending $38-billion acquisition of NXP Semiconductors, a leading supplier of chips for vehicles that is also expanding into self-driving technology, and it is believed that Broadcom is open to acquiring NXP.

Qualcomm's share price closed at $61.81 on Friday.

The proposed deal comes at a time when there has been significant consolidation within the chipset market, driven by greater demand for smartphones and connected devices. While it did not specify particular companies, Qualcomm and Apple have been in a long-running legal battle over licensing fees owed to Qualcomm. If Broadcom were to acquire Qualcomm's patent portfolio and change the licensing, it could have far-reaching effects on the mobile phone industry. Broadcom already provides designs for Wi-Fi and Bluetooth chips, and by bringing in Qualcomm it will be able to encompass LTE and 5G capabilities. The statement said that there would be no further comment from the company until the assessment was completed. The overall deal valued at $130bn.

Kevin Krewell, principal analyst at Tirias Research, said that the deal would still make sense for Broadcom and Qualcomm if divestitures were needed to address antitrust issues.


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