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Broadcom offers to buy Qualcomm for a record $130 billion

Broadcom bids $130 Billion to acquire Qualcomm

According to CNBC, Broadcom brought the offer to Qualcomm privately more than a year ago but was rebuffed. Broadcom, seeking to build a powerhouse in smartphone technology, has said it won't give up on this deal easily.

Wireless chip manufacturer Broadcom has officially bid to buy its rival Qualcomm in a deal worth up to $130 billion. We refer investors to our November 3 note, written after Bloomberg and The Wall Street Journal surfaced rumors about the potential bid, but in short, we see a sound strategic rationale for such a deal, and the financial component is especially attractive for Broadcom because we value Qualcomm at $68 per share on a stand-alone basis. Qualcomm will argue that the proposal is an opportunistic move to buy the chipmaker on the cheap, the people said, and it will likely recommend that shareholders reject it. As of Monday, shares of Qualcomm are still about 8% lower than the $70 per share offer price.

Broadcom's offer is at a premium of 27.6 percent to Qualcomm's closing price of $54.84 on Thursday, a day before media reports of a potential deal pushed up the company's shares. The company has gone so far with its Apple fight that it recently filed a lawsuit seeking to ban sales of the iPhone in China.

If the acquisition were to be successful, the merged companies would sit at third place in the chip-making industry, behind Intel and Samsung at second and first place, respectively.

"This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products", Hock Tan, resident and chief executive officer of Broadcom, said in a statement Monday.

Tan visited President Trump at the White House last week to announce that Broadcom would be moving its headquarters from Singapore to Delaware.