Leading chipmaker Qualcomm is presently in the middle of a serious takeover bid from rival Broadcom. First, Broadcom made a $103 billion buyout offer which was turned down by Qualcomm on grounds of undervaluation. Next, some shareholders of Broadcom were said to be discussing a $10 per share bump in the initial offer. And now, Reuters reports that Broadcom is lining up board nominees for Qualcomm shareholders to vote for or against. If all goes well, Broadcom would probably make a revised offer in March 2018.
Broadcom has lined up nine men and two women as board director nominees, many of whom have invaluable experience in the technology industry. Once the sale goes through, they would replace Qualcomm directors on the board. It is likely that Broadcom’s new increased offer would depend on Qualcomm’s reception of its director nominees. Its initial offer priced Qualcomm shares at $70 apiece, and investors reckoned that it would’ve been a “steal” if the deal were to go through at that price.
If and when the deal goes through, it would create the world’s largest chip manufacturer giving both players a significant edge over the likes of Intel, IBM, and even Apple that has ramped up its own chip game to reduce dependence on Qualcomm with which it has been embroiled in bitter court battles. Broadcom, on the other hand, is so keen to take over Qualcomm that it is willing to relocate to the US from its current headquarters in Singapore. “We would not make this offer if we were not confident that our common global customers would embrace the proposed combination,” Broadcom CEO Hock Tan had stated last month.
Meanwhile, Qualcomm is nearing a $38 billion acquisition of Dutch automotive chip-maker NXP Semiconductors NV that comes with a 45,000-strong workforce, and operations in 35 countries. It is also dealing with billion-dollar lawsuits from Apple over patent infringements and under-payments. Recent reports have also suggested that Apple might even be considering dropping Qualcomm-produced chips from future iPhones and iPads, which could result in losses of several billion-dollars for the chip maker. Hence, Broadcom’s offer — whatever the final figure be — is ready cash and an opportunity to lead the $300 billion chip manufacturing market.