Broadcom offers $103 billion for Qualcomm in chip megadeal

The Broadcom proposal stands whether Qualcomm's pending acquisition of NXP Semiconductors N.V. ("NXP") is consummated on the now disclosed terms of $110 per NXP share or the transaction is terminated.

Broadcom and Qualcomm are no strangers to acquisitions, with the pair in talks to complete multibillion-dollar deals.

Qualcomm said it would review the proposal.

However, according to the FT, Qualcomm is set to reject the deal, raising the prospect of a fight for the future of the company. Including debt, the transaction is worth US$130 billion.

Broadcom rose up by 5.5 percent on Friday for a estimated market value of $112 billion.

Broadcom could spin out Qualcomm's licensing arm, QTL, to get regulatory approval and funding for the deal, Nomura Instinet analyst Romit Shah said.

On Monday, Qualcomm's shares were up 3 percent at $63.71 in morning trading, suggesting that investors were skeptical a deal would happen.

"We think QTL could fetch $25 billion in a sale to a private equity firm or multi-national telecommunications company", Shah said.

Qualcomm has a shareholder-friendly corporate governance structure, making it more vulnerable to a takeover bid.

"This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products", Hock Tan, resident and chief executive officer of Broadcom, said in a statement Monday.

Its entire 10-member board is up for re-election this spring, and Broadcom could seize on the December nomination deadline to put forward its own slate that would then help make negotiations.

"We are well advised and know what our options are, and we have not eliminated any of those options", said Tan, who has pulled off a string of deals over the past decade.

The acquisition offer comes just days after President Trump announced that Broadcom would be moving its headquarters to the United States from Singapore and as Qualcomm is embroiled in a fierce legal battle with Apple.

Qualcomm's chips and patents affect nearly every smartphone model in the world, and Broadcom is offering $70 a share, which is a 28pc premium on Qualcomm's closing stock price last Thursday (2 November) according to a report in The New York Times.

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