Broadcom plans Qualcomm bid according to sources

Broadcom plans Qualcomm bid according to sources

Since publication Broadcom and Qualcomm have confirmed the offer, with Broadcom disclosing that the bid of $70 a share is made up of $60 cash and $10 in Broadcom shares.

"It's a smart move that would make Broadcom into a tech juggernaut", said GBH Insights analyst Daniel Ives.

Broadcom is in the process of closing its $5.5bn acquisition of Brocade, while Qualcomm is struggling through regulatory scrutiny to complete its $38bn deal for Dutch semiconductor vendor NXP.

Hock Tan, president and CEO of Broadcom, said in a statement: "This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products". In part this might be inspired by Qualcomm's pending release of the Centriq family of processors seeing as how Broadcom cancelled their ARM based server chip development earlier this year.

Broadcom's acquisition would be the most ambitious move by Tan, who has turned a small, scrappy chipmaker into a $100-billion company with a string of deals, since he took the helm a decade ago.

Qualcomm's share price closed at $61.81 on Friday. Qualcomm's recent forward PE of 15.4 was well below its 25.9 average. A combination with Broadcom would not change that.

Qualcomm faces a multinational legal battle with Apple Inc (AAPL.O) over Qualcomm's licensing terms to Apple and Apple is considering dropping Qualcomm chips from its phones. Moreover, it would create a company with "massive market share" in the kind of chips that power Wi-Fi, location data and Bluetooth, necessary for the next generation of connected devices, said Stuart Carlaw, chief research officer at ABI Research. The deal has been delayed as it's scrutinized by the Committee on Foreign Investment in the United States, which investigates proposed acquisitions of USA companies by foreign buyers on national security and intellectual property grounds.

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