Broadcom Looks To Acquire Qualcomm In Takeover Bid

by Sophie Craig November 4, 2017, 0:25
Broadcom Looks To Acquire Qualcomm In Takeover Bid

Broadcom is speaking to advisers about the potential deal, said the people, who asked not to be identified because talks are private. The news, reported by Bloomberg today, would value Qualcomm shares at around $70, and investors immediately responded enthusiastically by sending Qualcomm stock up almost 14 percent in what Bloomberg says is the largest stock movement for the company in almost a decade.

As for Broadcom, its CEO Hock Tan has a huge appetite when it comes to acquisitions and states that he is interested in more deals, which could be halted thanks to the intervention of USA regulators since Qualcomm is a US -based technology company. No final decisions have been made and there's no guarantee a deal will go ahead.

Shares of Broadcom closed up 5.5% Friday after the report, while Qualcomm's stock surged 12.7%. Broadcom stock, meanwhile, is trading up almost 6.5 percent. Bloomberg says it could be for more than $100 billion.

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Five years ago, when smartphone demand was soaring, Qualcomm briefly overtook Intel in market value.

It is also possible that Broadcom wishes to purchase Qualcomm so that the legal battle with Apple draws to a close and because the chipset manufacturer could eventually become an industry arm of Apple's supplier. For one, Qualcomm is in the midst of a legal dispute with Apple, with the dispute having started in January when Apple sued Qualcomm for $1 billion. Broadcom announced yesterday its intention to move corporate headquarters back to the U.S.to take advantage of the lower tax rates expected.

This comes at a time when Qualcomm itself is trying to complete a $47 billion purchase of NXP Semiconductors. The deal is facing regulatory examination in Europe and opposition from some shareholders including activist hedge fund firm Elliott Management Corp., which has argued the offer undervalues NXP. The two companies are already among the top 10 providers of chips in an industry that's consolidating rapidly.


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