Broadcom & Qualcomm – $120 billion takeover (BAW5)
As you may be aware Broadcom had previously offered $70 per share to Qualcomm share holders in an attempt to acquire Qualcomm which made the offered amount around $100 billion… the biggest acquisition in history… unfortunately Qualcomm refused the offer as it believed that Broadcom had undervalued the company.
The battle goes on and apparently Broadcom are now offering around $80-$82 per share which would value the acquisition at around $120 billion and Broadcom seems to believe that the deal could be completed within 12 months.
It appears that Broadcom are targeting Qualcomm mainly for access to advanced 5G wireless networking technology, especially as Qualcomm currently has unrivalled market share in the LTE manufacturing game (with Apple being one of the major clients). With the race on to get 5G up and running as soon as possible, this would give Broadcom a major advantage in the race.
Looking back through the history of Broadcom, you can see some interesting items, for example, in April 2009, settling years of legal battles with Qualcomm over wireless patents which meant that Qualcomm had to pay $891 million in cash to Broadcom over a four-year period ending June 2013.
Broadcom are known to make large acquisitions as well. Looking back to 2011, there was the acquisition of Netlogic Microsystems for $3.7 billion, followed by Broadlight ($230 million) and Wisair ($1 million) in 2012. More noticeably though, in 2013, the acquisition of LSI for $6.6 billion, followed by Emulex in 2014 for $609 million and finally Brocade Communications Systems in 2016 for $5.9 billion. None of these are anywhere near as large as the proposal for Qualcomm.
We’ll have to see whether this goes as smoothly as Broadcom hopes, but Qualcomm could even benefit if the deal does not go ahead due to a higher than normal breakup fee (this is normally around 3-4% of the total acquisition offer – meaning Qualcomm could easily walk away with at least $5 billion even if the deal falls through)
Blog-a-Week 2018 Posting (BAW):
In previous years, I have had periods throughout the year where I have been unable to post an entry to my blog. During 2018, my aim is to post a blog entry each week of the year. I’m hoping that the blog entries will all be useful bits of information or items that I’ve been working on recently but if the standard of the entries drops, I apologise now, as this could have been a busy week and I wasn’t able to put in as much time as I would have liked into the post