Broadcom plans Qualcomm bid according to sources

Broadcom plans Qualcomm bid according to sources

The Broadcom proposal stands whether Qualcomm's pending acquisition of NXP Semiconductors N.V. ("NXP") is consummated on the now disclosed terms of $110 per NXP share or the transaction is terminated. We note that Broadcom's bid is independent of Qualcomm's success in closing its bid for NXP.

Qualcomm said its board of directors is now reviewing the offer. The proposed transaction is valued at approximately $130 billion on a pro forma basis, including $25 billion of net debt, giving effect to Qualcomm's pending acquisition of NXP on its now disclosed terms.

Qualcomm, based in San Diego, said that it is reviewing the bid, and that it will have no comment until that review is completed by its board.

Broadcom shares rose 1.4 per cent to US$277.52 after touching a record of US$281.80.

"Broadcom's proposal is compelling for stockholders and stakeholders in both companies".

Broadcom could spin out Qualcomm's licensing arm, QTL, to get regulatory approval and funding for the deal, Nomura Instinet analyst Romit Shah said.

Broadcom had US$5.25 billion in cash and cash equivalent as of July 30.

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Broadcom approached Qualcomm past year to discuss a potential combination, but did not contact Qualcomm prior to unveiling its $70 per share offer on Monday, according to sources.

Hock Tan, president and CEO of Broadcom, said in a statement: "This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products".

"We are well advised and know what our options are, and we have not eliminated any of those options", said Tan, who has pulled off a string of deals over the past decade.

If Broadcom decides to make a hostile bid, Qualcomm's governance rules would allow the rival to submit its own slate for the entire 10-member board by a Dec 7 nomination deadline.

The chip manufacturer Broadcom is proposing a $130 billion deal to purchase Qualcomm in what would be one of the biggest tech mergers in history.

The bid comes as Broadcom plans to move its headquarters to the United States from Singapore.

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