Qualcomm poised for fight with Broadcom

Qualcomm poised for fight with Broadcom

Perhaps the most important new news on the bid is that Qualcomm is expected to reject this deal as it undervalues the company. It has pulled off a string of purchases over a decade.

The move would combine two of the largest makers of wireless communications chips for mobile phones and could pose a significant competitive threat to Intel, which has been looking to diversify into smartphone technology. According to CNBC, Broadcom brought the offer to Qualcomm privately more than a year ago but was rebuffed.

The resulting tech company would control key components needed to make smartphones and is likely to face scrutiny from regulators.

Qualcomm is now trying to close its pending $38-billion acquisition of NXP Semiconductors, a leading supplier of chips for vehicles that is also expanding into self-driving technology, and it is believed that Broadcom is open to acquiring NXP.

"Now it's a game of high-stakes poker for both sides", he said.




Qualcomm said in a statement Monday morning that it had received the offer and its board of directors would be reviewing it.

Broadcom said BofA Merrill Lynch, Citi, Deutsche Bank, JP Morgan and Morgan Stanley have advised that they are confident that they will be able to arrange the necessary financing for the proposed transaction. We think NXP would also fit in reasonably well under the Broadcom umbrella, but we're surprised that Qualcomm's cash hoard isn't a requirement to fund Broadcom's bid. Analysts say that if Broadcom can salvage the Apple relationship, it would sharply increase potential returns from the takeover.

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.

Tan also has a history of cutting costs at acquired companies, and Charter Equity analyst Ed Snyder predicted Tan would cut away waste at Qualcomm.

Broadcom president and chief executive Hock Tan said it was a "complementary transaction" that would position the combined company as a "global communications leader".

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