Sohu Technology / Lu Lin Xuan
Trying to swallow a giant elephant, Broadcom Who is it?
Prior to this, Broadcom did not enter the consumer market as frequently as Qualcomm.
In fact, both Qualcomm and Broadcom are semiconductor companies with high levels of business overlap, Broadcom has long been considered a Qualcomm competitor. After Anwar High Technologies spent 37 billion U.S. dollars to acquire the original Broadcom in 2015, the performance of New Broadcom has been significantly improved.In the fourth quarter of 2016 revenues have surpassed Qualcomm, became the IC design company in the world.
In fact Broadcom chips also have a wide range of applications, HTC, Google and Apple are Broadcom's major customers, but compared to Qualcomm's publicity, Broadcom has become a hidden behind the giant.
In contrast, Qualcomm is well known as a solution provider for smart phone chips. According to Ann Bunny data show that the first half of 2017 using Qualcomm processor mobile phone brands accounted for more than 60%.
However, according to Nov. 2 Qualcomm earnings report, Qualcomm fourth quarter net profit of 200 million US dollars, a decline of 89%. And Qualcomm net profit decline has lasted for some time, industry analyst at Tuo Institute Yao Jiayang had given three major factors: including from Spreadtrum MediaTek and other industry competition, Huawei almost fully into Hass processor , And the growth of smartphones slowed down.
Therefore, after Qualcomm was entangled with Apple's lawsuit and the timing of the net profit plummeted, the Broadcom finally could not help but want to devour the giant statue of Qualcomm.
Successful merger will create a "monster Monster"
According to Broadcom's information, Broadcom bids contain $ 60 in cash and $ 10 in cashstock, Higher than the Nov. 2 closing price of Qualcomm 28% premium. After the media revealed Broadcom may get Qualcomm news, Qualcomm shares rose 12.71% last Friday, to close at 61.81 US dollars. According to last Friday's closing price calculation, Qualcomm market value of about 91.1 billion US dollars. Driven by Broadcom's formal offer, Qualcomm shares rose more than 3% in Monday's pre-market trade.
According to Stacy Rasgon, an analyst at Sanford C. Bernstein & Co., changes in Qualcomm's management may help resolve the dispute with Apple more quickly. This will solve the immediate needs of Qualcomm.
But a person close to Qualcomm said the offer of $ 70 a share is significantly below the expectations of Qualcomm's board willingness to consider the merger. Informed sources said Qualcomm may argue that the merger proposal is a opportunistic move - because Qualcomm shares have been depressed after the dispute with Apple's licensing dispute - and may recommend shareholders to veto the program. In a statement Monday, Qualcomm said it will "evaluate the offer to seek ways to maximize the benefits for Qualcomm shareholders."
Capital is quite optimistic about this acquisition. It is understood that Bank of America, Citigroup, Deutsche Bank, JPMorgan and Morgan Stanley are already lining up to provide financing to Broadcom. Silver Lake, a US private equity group that plays an important role in the transformation of Broadcom, has pledged $ 5 billion in convertible debt financing to support the proposal.
The reason is obvious, if the acquisition goes well,After the acquisition of Qualcomm's new company will become a "monster monster" in the wireless communications chip area will be in an absolute monopoly.This will greatly affect the downstream industries, including mobile phones, computers and other terminal manufacturers and TSMC, SMIC and other foundries.
More importantly, with the advent of the 5G era, the value of Qualcomm, which owns numerous patents, is once again on the rise. Obviously the current acquisition of low-cost Qualcomm will be a bargain.
But as a result, the merger of Qualcomm and Qualcomm will face stringent regulatory review, how to pass the approval meeting as the last hurdle.
Behind the acquisition, Chinese mergers and acquisitions expert surgeon
The day before Broadcom acquired Qualcomm rumors, Malaysian Chinese, Broadcom CEO Hock Tan and Trump appeared together at the White House, announcing Broadcom's relocation of its legal base and headquarters in Singapore to the United States.
Tan has dominated a series of semiconductor deals over the past few years and his meetings with Trump and a series of decisions are seen as a censorship of the $ 5.5 billion acquisition of Brocade.
But his offer to Qualcomm is undoubtedly the "daring." In a letter to the board of directors of Qualcomm, he said: "We think mutual customers on both sides of the globe will gladly accept the merger without substantive antitrust or other regulatory issues or we will not come up with the proposal. "
He pointed out that "this complementary transaction will enable the combined company to become a global communications leader with an impressive portfolio of technologies and products .... With a broader and more diversified product portfolio, after the merger Of the companies will provide our global customers with more advanced semiconductor solutions and enhance shareholder value. "
According to the official data provided by Broadcom,If Broadcom merges with Qualcomm, it will generate approximately $ 51 billion in revenue in FY17.