Broadcom Boosts Bid for Qualcomm to $121B

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Qualcomm has argued to its shareholders that Broadcom's hostile bid is aimed at acquiring the company on the cheap.

Broadcom is sweetening its offer to acquire Qualcomm for more than $121 billion.

Silicon company Broadcom has upped its offer to fellow chipmaker Qualcomm, with the offer valued between US$120-billion and US$146-billion. That would represent a 50% premium over the price Qualcomm was trading at on November 2, before the news of the first approach broke. Whether a deal actually goes ahead, however, remains an open question - Qualcomm's leadership is fiercely opposed, while analysts have said that even if shareholders approved the deal, it could be rejected on antitrust grounds. Qualcomm shares are down 3.7% to a market cap of about $94.2 billion. "Qualcomm will have no further comment on the proposal until its Board of Directors has completed its review", in a statement today.

If reports from a little while back were correct as to the "fair" price of a prospective pact pursued by the San Diego-based semiconductor giant, Broadcom Limited's latest, "best and final" offer might just be too good to turn down.

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Qualcomm developed technology that became a foundation for all digital cellular communications, a position that allowed the company to both sell chips and charge a patent royalty for almost all smartphones sold. Qualcomm has told its shareholders that Broadcom's bid is an attempt to buy the company on the cheap. To appease regulators, Broadcom said it would agree to provisions "at least as favorable as" those provided by Qualcomm in its proposed takeover of NXP. Qualcomm primarily licenses its technology for the delivery of broadband and data, a business that would significantly benefit from the rollout of 5G wireless technology.

The renewed bid comes a month before Qualcomm's annual shareholder meeting, when Broadcom hopes to replace Qualcom's current board of directors.

"Our proposal includes substantially more Broadcom stock, which will allow Qualcomm stockholders a greater opportunity to participate in the upside created by the combined company's strategic and operational advantages", said Broadcom Chief Executive Hock Tan in a letter to Qualcomm's board. The second is the more innocuous of the two, as Broadcom requires that Qualcomm neither delays nor adjourns its annual meeting beyond March 6, 2018.

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