Broadcom offers $105 bn for Qualcomm in landmark deal

Broadcom offered about $105 billion for Qualcomm, kicking off an ambitious attempt at the largest technology takeover ever in a deal that would rock the electronics industry.

Broadcom made an offer of $70 a share in cash and stock for Qualcomm, the world’s largest maker of mobile phone chips. That’s a 28 per cent premium over the stock’s closing price on November 2, before Bloomberg first reported talks of a deal. The proposed transaction is valued at approximately $130 billion on a pro forma basis, including $25 billion of net debt.

Buying Qualcomm would make Broadcom the third-largest chipmaker, behind Intel and Samsung Electronics. The combined business would instantly become the default provider of a set of components needed to build each of the more than a billion smartphones sold every year. The deal would dwarf Dell’s $67 billion acquisition of EMC in 2015 — then the biggest in the technology industry.

“The combination of the two companies could generate strong synergies and create a dominant wireless business and overall powerful global semiconductor leader,” said Mike Walkley, an analyst at Canaccord Genuity.

Qualcomm is preparing to fend off the unsolicited offer, arguing it undervalues the company, people familiar with the plans have said. 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. In a statement Monday, Qualcomm said it would “assess the proposal in order to pursue the course of action that is in the best interests of Qualcomm shareholders.”

Hock Tan, president and chief executive officer of Broadcom, is making a play for Qualcomm as the once-unstoppable chipmaker limps through a rare moment of weakness.