Broadcom Ltd. suggested Qualcomm Inc. $ 70 per share — a 28% premium to the value of the world’s largest manufacturer of chips for mobile phones. The transaction is estimated at approximately 130 billion U.S. dollars, including 25 billion dollars in net commitments. Buy Qualcomm would make Broadcom’s third-largest chip maker after Intel and Samsung Electronics Co.
Fusion by default will make the company a major supplier of a number of components required to create smartphones. «We would not have proposed if I wasn’t sure our clients are well perceive this merger,» says hock tan, President and CEO of Broadcom.
However, Qualcomm can reject the offer, claiming that the company is undervalued. According to insiders, the group trying to buy on the cheap, and the shareholders are likely to reject the deal.
Qualcomm is experiencing not the best times. Its most profitable division, which licenses technology for mobile phones, threatened regulatory actions and legal issues associated with Apple Inc. If Apple will stop buying chips from Qualcomm for the iPhone and other products, it will cause a serious blow to the Department.
«The deal makes sense,» says Romit Shah, an analyst at Instinet. «Broadcom will receive an income of 30 billion dollars. Both companies have a significant share in the smartphone market».
If Broadcom will be able to make a deal, it will help to establish a relationship with Apple, which claims that Qualcomm asks too much and illegally uses its market position in the production of chips. To increase the pressure on Qualcomm, the company stopped paying the licensing fees and plans to develop devices that will use chips of the concern. Qualcomm claims that these actions of Apple is just trying to reduce the size of payments. The company filed a lawsuit to ban the sale and production of the iPhone in China.
The two giants, Qualcomm and Broadcom are cooperating with the administration of the President of the trump. But despite such political maneuvering, merging Broadcom-Qualcomm may be subject to intense regulation, as companies are in the top 10 suppliers of chips and their merger will help to establish control over the supply of major components of phone.
