Broadcom Increases Acquisition Offer for Chipmaker Qualcomm to $121 Billion

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Broadcom is reportedly moving forward with its attempt to purchase chipmaker Qualcomm, by increasing its bid for the company to about $121 billion and $82 per share, described as a "final offer." The new offer comes three months after Broadcom's first bid for Qualcomm, originally valued at about $105 billion ($70 per share), plus $25 billion of net debt (via Bloomberg).

If the acquisition goes through it would still be considered the "largest-ever technology deal," although Qualcomm's board previously rejected the first offer and is said to have "dug in" against threats of potential hostile takeovers. With the increased offer, Broadcom now hopes to put pressure back on Qualcomm to accept the deal and "improve prospects" for Broadcom CEO Hock Tan to be nominated to Qualcomm's board should the deal go through.


Broadcom Ltd. has raised its bid for Qualcomm Inc. to about $121 billion, in an attempt to force what could be the largest-ever technology deal. The new offer of $82 a Qualcomm share will be Broadcom's final offer, according to a statement Monday. The deal would take the form of $60 in cash and the remainder in Broadcom shares.

Broadcom's hostile bid for the larger San Diego-based company is the latest and most audacious move by Tan in a string of deals that have made his company one of the world's largest suppliers of semiconductors. He wants Qualcomm for its leading smartphone modem chip division, an example of what he calls a "franchise" that will continue to dominate.
If completed, Broadcom would become the third-largest chipmaker in the world, behind Intel and Samsung Electronics, and the combined Broadcom-Qualcomm business would "instantly become" the default provider of certain components required to build more than one billion smartphones sold every year. The acquisition would eclipse Dell's $67 billion purchase of EMC in 2015, considered at the time the biggest in the technology industry.

Qualcomm is said to be pushing back against such acquisition offers because it see its own future to be "much brighter as a standalone company," further stating that it's "on the cusp" of entering new product markets. At the same time, Qualcomm has been in a legal battle with Apple for over a year now, after Apple accused Qualcomm of charging unfair royalties for "technologies they have nothing to do with" and failing to pay for quarterly rebates.

Throughout the lawsuits, Apple eventually considered removing Qualcomm modems from its devices altogether moving forward, and the latest report from KGI Securities analyst Ming-Chi Kuo pointed towards Intel-only modems for the 2018 iPhones.

Article Link: Broadcom Increases Acquisition Offer for Chipmaker Qualcomm to $121 Billion
 
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thisisnotmyname

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With various regulatory attention they're getting recently, US suppliers (Apple certainly but others have made their opinions known as well) seemingly unhappy with them, and their China strategy rumored to face headwinds with China's desire not to have them establish a monopolistic position I'm surprised any increase was offered. There's a lot of IP there but that landscape changes relatively quickly and their former business practices are under fire globally. Broadcom obviously has people looking at this much more deeply than I but I'm still surprised.
 

ke-iron

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Qualcomm better sell, when all their high profile customers leave for the opposition, they will be left in the dust and forced to downsize and eventually file bankruptcy. Remember that chip maker or something like that who got too comfortable with Apple? Apple let them know years in advance that they were going to stop using their products and they didn’t take them seriously. I can’t remember the exact story but Apple is leaving Qualcomm things will be going downhill from there.
 

makr

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Qualcomm better sell, when all their high profile customers leave for the opposition, they will be left in the dust and forced to downsize and eventually file bankruptcy. Remember that chip maker or something like that who got too comfortable with Apple? Apple let them know years in advance that they were going to stop using their products and they didn’t take them seriously. I can’t remember the exact story but Apple is leaving Qualcomm things will be going downhill from there.
Yeah Imagination Technologies https://en.wikipedia.org/wiki/Imagination_Technologies
 
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thisisnotmyname

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The same could be said for the group manufacturing sapphire that had all their eggs in one basket, invested heavily in capacity for expected Apple demand, then folded dramatically when Apple didn't meet the expected demand. I know there's a second side to that story with Apple having quite demanding contracts to achieve the capacity regardless of whether Apple fully utilized or not but the fact remains, having a significant portion of your business (which is generally 10%+ even though I believe in some of these examples Apple was far higher) is a large risk.
 
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avtella

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Qualcomm’s situation is certainly getting worse in general, but in relation to Apple isn’t really the same as Imagination or the Sapphire producing company, (which actually was also in the Solar panel businesses which went south due to Chinese competitors), granted its a big huge chunk of their sales, Qualcomm isn’t anywhere nearly as dependent as those two companies when they made deals with Apple.

One less major competitor would be worse in the long run, it’s not like Broadcom will do any different with additional patents and market position from the acquisition.
 
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ke-iron

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Qualcomm’s situation is certainly getting worse in general, but in relation to Apple isn’t really the same as Imagination or the Sapphire producing company, (which actually was also in the Solar panel businesses which went south due to Chinese competitors), granted its a big huge chunk of their sales, Qualcomm isn’t anywhere nearly as dependent as those two companies when they made deals with Apple.

One less major competitor would be worse in the long run, it’s not like Broadcom will do any different with additional patents and market position from the acquisition.
You are right about it not being the same situation, but the thing is Qualcomm have major issues not only with Apple at this moment but with other companies and countries as well. Major major issues.

Also I don’t think lack of competition will be a problem. Intel is rising to the occasion and so will other companies emerge if need be.
 

sidewinder3000

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Broadcom is a supplier in good standing with Apple, and their CEO Hok Tan seems like a pretty sharp deal maker who knows how to work well with other companies. If they buy Qualcomm, I’m guessing it is with the knowledge that they will immediately quash the foolish licensing nonsense that is poisoning Qualcomm’s relationship with Apple and is all but forcing alApple to source all their modem chips from Intel. Once the licensing issue goes away, Apple will probably go back using Qualcomm chips again, since they never had an issue with the chips themselves and they strongly prefer having a diversified supply chain.

It’s absolutely in the best interest of QUALCOMM shareholders for them to except a fairly priced offer that will also return Apple, the worlds most powerful technology company, back into a customer. I’m curious whether Hock Tan and Tim Cook may have already talked about this and made a handshake agreement, since it would be good for both Broadcom, Qualcomm and Apple?
 

ke-iron

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Broadcom is a supplier in good standing with Apple, and their CEO Hok Tan seems like a pretty sharp deal maker who knows how to work well with other companies. If they buy Qualcomm, I’m guessing it is with the knowledge that they will immediately quash the foolish licensing nonsense that is poisoning Qualcomm’s relationship with Apple and is all but forcing alApple to source all their modem chips from Intel. Once the licensing issue goes away, Apple will probably go back using Qualcomm chips again, since they never had an issue with the chips themselves and they strongly prefer having a diversified supply chain.

It’s absolutely in the best interest of QUALCOMM shareholders for them to except a fairly priced offer that will also return Apple, the worlds most powerful technology company, back into a customer. I’m curious whether Hock Tan and Tim Cook may have already talked about this and made a handshake agreement, since it would be good for both Broadcom, Qualcomm and Apple?
The problem with Qualcomm is they’re being too greedy and consistently trying to cheat companies. Qualcomm is one of many vendors, yes a huge vendor with vast patents and capability to supply the demand. But like I said, there will be other companies who will rise to the occasion and once they do and Qualcomm high profile customers leave, they’re pretty much going to be up a creek when sales and stock prices take a major dive.

Over the years Apple has let the world know where they stand. They definitely don’t stand for none sense too long. They will either switch vendors or build their own.
 

sidewinder3000

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The problem with Qualcomm is they’re being too greedy and consistently trying to cheat companies. Qualcomm is one of many vendors, yes a huge vendor with vast patents and capability to supply the demand. But like I said, there will be other companies who will rise to the occasion and once they do and Qualcomm high profile customers leave, they’re pretty much going to be up a creek when sales and stock prices take a major dive.

Over the years Apple has let the world know where they stand. They definitely don’t stand for none sense too long. They will either switch vendors or build their own.
Come on—did you read anything I just wrote? If Broadcom buys Qualcomm, they will almost certainly stop Qualcomm’s greedy licensing squabbles with Apple and other customers because they will have a new, better CEO. It won’t get to the point where “Qualcomm high profile customers leave” because those issues will be resolved by the new management. People like Qualcomm’s chips, they just don’t like their current management. When new, better management is in place customers will have no reason not to use Qualcomm.
 

ke-iron

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Come on—did you read anything I just wrote? If Broadcom buys Qualcomm, they will almost certainly stop Qualcomm’s greedy licensing squabbles with Apple and other customers because they will have a new, better CEO. It won’t get to the point where “Qualcomm high profile customers leave” because those issues will be resolved by the new management. People like Qualcomm’s chips, they just don’t like their current management. When new, better management is in place customers will have no reason not to use Qualcomm.
I read what you posted and that’s based on a big if, and there is a high chance that the acquisition will not go through. Qualcomm chips aren’t anything special, just about the same features and performance can be had from other suppliers chips.
 

avtella

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Nov 11, 2016
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With more patents and a greater share of components in devices it’s only matter of time before things go back to square one in the long run, if such a deal occurs regardless of what Mr. Tan says. You could end up in situation like with CDMA previously, how Qualcomm prevented competition with patents.
 
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sidewinder3000

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I read what you posted and that’s based on a big if, and there is a high chance that the acquisition will not go through. Qualcomm chips aren’t anything special, just about the same features and performance can be had from other suppliers chips.
Aw, forget it.
 

avtella

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Nov 11, 2016
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I read what you posted and that’s based on a big if, and there is a high chance that the acquisition will not go through. Qualcomm chips aren’t anything special, just about the same features and performance can be had from other suppliers chips.
They were clearly superior to Intel’s modems, in the iPhone 7-8, with features having to be disabled just to match the inferior Intel modems for consistency sake, even then at mid to low signal areas they outperform Intel units, in some cases significantly and such differences can also have an impact on battery life. They also make good WiFi chipsets, even their MU-MiMO implementation in the QCA9984 (ie Netgear R7800 and Synology AC2600AC) actually worked unlike Broadcom’s equivalent the BCM4366 (ie Netgear R8500 and Asus AC88U) which actually caused performance loss and hence was detrimental.

Yeah there are other suppliers for various chips but certain companies produce certain things better than others, sometimes the difference can be great, so its not always so simple as you make it seem.
 
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