Broadcom plans $100bn deal to buy chipmaker Qualcomm

­­­­­­­­­­­Bloomberg

Broadcom Ltd. Chief Executive Officer Hock Tan is contemplating an audacious $100 billion bid for Qualcomm Inc., people familiar with the matter said, using what would be the largest technology takeover to build a powerhouse that dominates the market for wireless chips.
An offer of about $70 a share would include cash and stock and is likely to be made in the coming days, said the people, who asked to remain anonymous discussing a private transaction that could still not come to fruition.
Buying Qualcomm would transform Broadcom into the third-largest chipmaker, behind Intel Corp. and Samsung Electronics Co., and make it the leader in chips used in the more than 1 billion smartphones sold each year. The combination would dwarf Dell Inc.’s $67 billion acquisition of EMC in 2015 and meld Qualcomm’s dominance of chips that connect handsets to wireless networks with Broadcom’s expertise in chips that link devices to Wi-Fi networks.
“The deal makes a lot of sense,” Romit Shah, an analyst at Instinet, said on Bloomberg Television. “Broadcom would be getting $30 billion in revenue and it would be very strategic. Both companies have a significant presence in smartphones.” Qualcomm shares rose 19 percent in New York in their biggest intraday move since October 2008, after Bloomberg News first reported the takeover plans. They closed up 13 percent at $61.81, valuing the company at $91 billion. Broadcom rose 5.5 percent, for a market valuation of about $112 billion. Representatives for Broadcom and Qualcomm declined to comment.
A serial acquirer, Broadcom’s Tan has played a pivotal role in a wave of consolidation engulfing the $300 billion semiconductor industry over the last three years. Broadcom, created in 2016 when Avago Technologies Ltd. acquired Broadcom Corp. for $37 billion, has built itself from a former Hewlett Packard division into one of the largest chipmakers via a string of purchases. A former CEO of Integrated Circuit Systems who has held senior management positions at Commodore International, PepsiCo Inc. and General Motors Co., Tan has made it plain that he wants to strike more deals.
Tan, who holds degrees in mechanical engineering from the Massachusetts Institute of Technology and an MBA from Harvard Business School, laid the foundation for future dealmaking. In a broadcast announcement alongside US President Donald Trump in the Oval Office, Tan said he will move Broadcom’s headquarters to the US from Singapore. Broadcom, which counts Apple Inc. among its largest customers, already lists San Jose, California, as a corporate co-headquarters.
Qualcomm finds itself in a weakened state. It’s embroiled in a
legal battle with Apple that has taken a toll on revenue and jeopardised a business model that
made Qualcomm one of the most successful chipmakers.