Broadcom raises Qualcomm bid to $US121b

Isaac Cain
February 7, 2018

Broadcom was meeting with its advisers late on Sunday to finalise an offer that values Qualcomm between $80 and $82 per share.

A news release out Monday revealed how the San Diego-based Qualcomm received a revised, non-binding, unsolicited proposal from Broadcom to acquire all outstanding shares of Qualcomm for $60.00 per share in cash and $22.00 per share in Broadcom stock. That would represent a 50% premium over the price Qualcomm was trading at on November 2, before the news of the first approach broke. Because Broadcom's sweetened offer does not include that possibility, Qualcomm is going to get squeezed from both sides.

On top of the top-line pot sweetening, Broadcom says it's willing to pay a "ticking fee" that would pay out more cash to Qualcomm shareholders if the deal takes more than a year to close once the companies enter into a definitive agreement. It also offered to pay fees if a merger is not completed within a one-year time period or was blocked by regulators. But a growing number of NXP holders, led by activist investor Elliott Management Corp., are pushing back against Qualcomm's $110-a-share offer and calling for a price greater than a $135-a-share estimate of the company's stand-alone value.

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Broadcom recently moved its legal headquarters from Singapore to the United States, and has its co-headquarters in San Jose.

However, the big increase - albeit in Broadcom stock rather than greenbacks - may persuade Mollenkopf and Qualcomm's shareholders to take the money (and Broadom stock) and run. Qualcomm's board said that Broadcom's proposal significantly undervalues Qualcomm given its leadership position in mobile technology and their future growth opportunity. This also happens to be Broadcom's "best and final offer", so if Qualcomm doesn't accept, that's (probably) the end of this whole ordeal. Formed from an unwanted division of Hewlett Packard, it has become a major player in a matter of years, making numerous Wi-Fi and Bluetooth chips found in many smartphones and other gadgets. 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 denounced that plan, but shareholders will be asked to vote on the competing slates of candidates, with results to be announced at the shareholders meeting scheduled for March 6.

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