Qualcomm in November rejected Broadcom's initial $103 billion offer for the company, arguing it undervalued Qualcomm. Despite hopes of its newfound partnership with Samsung quelling hostile takeover bids, it seems that Qualcomm is far from in the clear as Broadcom is upping its offer from $130 billion to a record breaking $145 billion.
Broadcom Ltd plans to raise its bid for Qualcomm Inc to around $120 billion, both Bloomberg and Reuters reported today citing unnamed sources, as it tries to force Qualcomm to come to the table in what would be the largest-ever technology deal. According to Broadcom, the $82 price represents a premium of 50% to Qualcomm's share price on November 2, 2017, the day when speculation about the potential acquisition was first published.
If a deal is reached, it's going to be the largest tech deal in history.
Broadcom said it was willing to pay Qualcomm a "ticking fee" if the transaction is not completed within its target of 12 months after any definitive agreement.
The new offer values the company at US$82 per share - a premium of 24% from Qualcomm's close on Friday.
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Broadcom's move would create a tech giant whose products would be used in almost all of the world's smartphones. Broadcom labeled it as its "best and final offer".
In a presentation on its website, Broadcom criticized the performance of Qualcomm's management, saying Qualcomm's "business model has been broken for a long time" and that the company's stock has significantly underperformed peers.
It also hinges on Qualcomm not delaying or adjourning its annual meeting past March 6, when Qualcomm shareholders will vote on a new slate of directors recommended by Broadcom and private-equity firm Silver Lake Partners. In addition, the company is prepared to pay Qualcomm a "significant" reverse termination fee if the deal does not achieve regulatory approval. To appease regulators, Broadcom said it would agree to provisions "at least as favorable as" those provided by Qualcomm in its proposed takeover of NXP. Qualcomm now provides SOCs to network carriers and OEM device manufacturers.
Qualcomm is in the middle of a giant acquisition of its own, seeking to buy chip maker NXP Semiconductors. The company is also extending board-of-directors seats to longtime Qualcomm exec Paul Jacobs and one other current Qualcomm board member in the combined company's boardroom.