In an effort to pressure Qualcomm's board of directors to negotiate the two companies, Broadcom plans to announce a higher offer of Qualcomm on Monday. It is reported that Broadcom proposed the total acquisition price will reach about 120 billion U.S. dollars.
Broadcom plans to increase the timing of the acquisition of Qualcomm, prior to Qualcomm's March 6 annual shareholders meeting. In this general meeting, the company's investors will vote for the directors. Broadcom has nominated its own directors to seek replacement of all existing Qualcomm directors. However, Qualcomm said in a statement late last year that its board of directors has adopted the recommendation of the board of governors and has unanimously decided not to nominate any of the 11 candidates nominated by Broadcom and Silver Lake Capital.
Broadcom, formerly Anwar Tech, is currently headquartered in Singapore. Broadcom, which manufactures connection chips for mobile devices and servers, is trying to become a mainstream chip supplier in the world. Sources said Broadcom plans to hold talks with its advisors later this Sunday to finalize a new takeover offer for Qualcomm. It is reported that the offer to Qualcomm quotations of 80 to 82 US dollars per share.
Broadcom announced in early November that it had submitted a tender offer to Qualcomm for the acquisition of all outstanding Qualcomm shares at a cash offer of $ 60 a share plus a $ 10 worth of shares at a total transaction value of $ 103 billion. Coupled with Qualcomm's debt, the transaction total more than 130 billion US dollars, the history of science and technology for the largest M & A transactions. Once the acquisition is completed, the acquisition of Qualcomm after the new company will become super "to change the existing pattern of the entire chip industry, Broadcom become the third in the industry, second only to Intel and Samsung Electronics, in the field of wireless communications chips will In the absolute monopoly position. This will greatly affect the downstream industries, including mobile phones, computers and other terminal manufacturers and TSMC, SMIC and other foundries.
However, Qualcomm officially rejected the $ 103 billion tender offer made by Broadcom on November 13. Qualcomm chairman Paul? Middot; Jakob said: "Board of Directors agreed that Broadcom's proposal apparently underestimated Qualcomm's mobile technology and future development prospects of the leading position. "Broadcom announced early last month it began sending letters to Qualcomm shareholders hoping to replace QUALCOMM's existing board members with a shareholder vote in a Qualcomm shareholder meeting to be held in March this year.
Even though Qualcomm accepted Broadcom's takeover offer, the transaction still needs to be evaluated through multinational antitrust investigations and regulations. According to sources, if regulators object to Broadcom acquisition of Qualcomm transactions, Broadcom intends to provide the latter higher than the usual standard break fee. Typically, break-rates for such transactions range from about 3% to 4% of the total transaction price.
However, sources warned Broadcom chief executive Hurun (Hock Tan) may at the last minute of the terms of the agreement to make substantial adjustments. Up to now, both Qualcomm and Broadcom have not commented on this.
Broadcom has said the company is very confident that the deal will be completed within 12 months of signing the agreement. Qualcomm retorts that the transaction takes more than 18 months to go global and the regulatory review process is risky.
Qualcomm had previously told corporate shareholders that Broadcom's hostile takeover bid was for cheap company acquisition. Qualcomm last week's earnings report showed that the company's first-quarter revenue as of the end of last year was 60 billion U.S. dollars, up 1% over the 6 billion U.S. dollars in the same period of previous year. Its net loss was 6 billion U.S. dollars and its net profit for the same period of the previous year was 700 million US dollars. Qualcomm Q1 results turnaround, mainly in the earnings report included in the US "Tax and Employment Bill" related to the one-time spending of 6 billion US dollars, and the European Commission penalized the company a fine of 1.2 billion US dollars.
Qualcomm first quarter fiscal year in accordance with GAAP accounting for revenue of 6 billion US dollars, not in accordance with GAAP diluted earnings per share of 0.98 US dollars per share, better than market analysts had expected. Thomson Reuters survey shows that analysts on average expected the first quarter of Qualcomm not in accordance with GAAP accounting revenue of 59.3 billion US dollars, earnings per share of 0.91 US dollars.
Qualcomm's pending deal to acquire NXP may also affect Broadcom's acquisition of Qualcomm. After the transaction was qualified for approval by the EU's antitrust agency, the European Commission, sources said China's Ministry of Commerce is currently the only major regulatory body in the world that has not yet ratified the deal. China's Ministry of Commerce is still waiting for Qualcomm to provide enough concessions before approving the deal.
However, even with the removal of all regulatory barriers to antitrust, NXP shareholders are still reluctant to sell their shares to Qualcomm, arguing that Qualcomm must make adjustments to the $ 110 acquisition price per share. The sources said they were greatly frustrated by the unwillingness of Qualcomm to negotiate with NXP shareholders to raise the purchase price. However, NXP's decent financial data will be able to support their low-pass acquisition of Qualcomm point of view. The progress of NXP transactions will determine the outcome of the three corporate stakeholders. One of the reasons why Qualcomm rejected Broadcom's $ 105 billion takeover bid was that the acquisition of NXP would help the company expand into new markets. This growth potential, which means Broadcom proposed the largest mergers and acquisitions in the technology industry, still greatly underestimated the value of Qualcomm.