Broadcom plans record tech deal with Qualcomm bid

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Broadcom bids $130 Billion to acquire Qualcomm

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.

Shareholders of both companies seemed to approve however - the share price of Qualcomm and Broadcom rose as news of the bid emerged, Whether this feeling of optimism will persist in the face of takeover battle remains to be seen.

On Nov. 6, Broadcom announced an unsolicited bid to acquire Qualcomm for $70 per share ($60 in cash and $10 in stock) in a deal valued at $130 billion, assuming that Qualcomm's ongoing bid to acquire NXP Semiconductors for $38 billion goes through.

Broadcom is up 2.31% to $279.95 and Qualcomm is up 4.57% to $64.63.

It is likely that Qualcomm will reject the bid, as it believes that its value is far below what the company is worth.

The Financial Times is reporting that Broadcom is planning to acquire NXP, as well as Qualcomm.

According to a statement released by the company, Broadcom hopes to increase its share of the advanced semiconductor market and is confident that its proposal will "receive all necessary [regulatory] approvals in a timely manner".

Qualcomm is now trying to close its pending $38-billion acquisition of NXP Semiconductors, a leading supplier of chips for vehicles that is also expanding into self-driving technology, and it is believed that Broadcom is open to acquiring NXP. The forward price-to-earnings ratio for Broadcom recently stood at 14.6, slightly above its 13.5 average.

Adjacent products are often cheaper when offered by one company, according to standard economic theory, which could be good for phone makers and potentially incline regulators toward allowing the deal, said Henry C. Su, a former Federal Trade Commission trial attorney. Broadcom primarily focusses on Wi-Fi and Bluetooth chips.

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