Chipmaker Broadcom bids $130bn for rival Qualcomm

By:
James Pearce
Published on:

Combination of the two semiconductor firms could be one of the biggest tech acquisitions of all time, if approved by Qualcomm's shareholders

Semiconductor firm Broadcom has bid to buy rival Qualcomm in a deal worth $130 billion, potentially one of the biggest tech mergers of all times in terms of value.

The proposed deal would see Broadcom paying a 28% premium on shares for its rival but is reliant on Qualcomm completing its $38 billion takeover of NXP, which has yet to close.

Reports claim the merger between Broadcom and Qualcomm would create a company with a market capitalisation of more than $200 billion and would be one of the biggest takeovers in technology sector history.

However, the Financial Times reports two unnamed sources who claim that Qualcomm’s shareholders could be set to reject the takeover, claiming the valuation is too low and the merger would face significant regulatory challenges.

"Broadcom's proposal is compelling for stockholders and stakeholders in both companies. Our proposal provides Qualcomm stockholders with a substantial and immediate premium in cash for their shares, as well as the opportunity to participate in the upside potential of the combined company," said Hock Tan, president and chief executive officer of Broadcom.

"This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products. We would not make this offer if we were not confident that our common global customers would embrace the proposed combination. With greater scale and broader product diversification, the combined company will be positioned to deliver more advanced semiconductor solutions for our global customers and drive enhanced stockholder value."

The proposed deal comes at a time when there has been significant consolidation within the chipset market, driven by greater demand for smartphones and connected devices.

Japanese telecoms firm SoftBank has already agreed a deal to buy British semiconductor firm Arm, while Intel bought Altera, and Qualcomm has agreed a deal for NXP. 

The agreement would push the combined firm to become the third-largest chipmaker in the world, behind Intel and Samsung, whilst giving Broadcom a strong foothold in the developing 4G and 5G markets. Broadcom primarily focusses on Wi-Fi and Bluetooth chips.