Earlier this week, Broadcom made an unsolicited bid to acquire its rival, Qualcomm, for $130 billion. If Qualcomm accepts the deal, Broadcom will become the third-largest chip making company in the world, behind Intel and Samsung.
According to The Verge, “Broadcom is offering a combination cash-and-stock deal of $70 per share for Qualcomm, representing a 28 percent premium over the closing price of Qualcomm’s stock on November 2nd. The $130 billion offer includes $25 billion in assumed debt.” The Verge also reports that Broadcom’s shares have risen 60 percent over the past year, while Qualcomm’s shares have faltered due to a legal battle with Apple on alleged anti-competitive behavior.
Qualcomm is well known for its mobile systems on a chip (SoCs) – a circuit that integrates facets of a computer while working off of low power consumption – and which also powers popular mobile devices. The company also owns patents related to wireless networking, and, according to Gizmodo, is the largest manufacturer of smartphone modems, including those found in Apple’s iPhones.
What a potential merger means to decision makers:
Based off of reports by The Verge and Gizmodo, it does not appear that decision makers will be directly affected if Qualcomm accepts Broadcom’s offer. Instead, the potential acquisition will be another shake up in the semiconductor industry, which has be enduring rapid fire mergers and acquisitions in recent years.
However, those who may be affected include stockholders and stakeholders in each company. Reports have suggested that Hock Tan, CEO and president of Broadcom, thinks this acquisition will boost the two companies as industry leaders, and benefit all parties invested in them.
“This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products,” Tan said in a statement. “We would not make this offer if we were not confident that our common global customers would embrace the proposed combination.’’