Back in November, we reported on a potential acquisition of Qualcomm by Broadcom. Such a merger would be the biggest tech-based deal in history. Over the last few months, little information has emerged regarding the acquisition. Now, a report suggests Broadcom is intensifying its pursuit of the chip giant.
Broadcom, a leader in wired and wireless chips, says it has now tabled a final offer for Qualcomm, following a December escalation of its pursuit.
The company had previously offered Qualcomm stockholders per share. $60.00 in cash and $10.00 in Broadcom shares. Qualcomm's Board of Directors quickly and unanimously rejected those terms, saying its business had been undervalued.
Today, Broadcom is back with improved terms that it insists represent a final offer. The company is seeking all outstanding Qualcomm shares and common stock under the following terms:
Today, Broadcom board announced that it has made a best and final offer to acquire all of the outstanding shares of common stock of Qualcomm. Read the details about the new offer below.
- Broadcom is prepared to acquire Qualcomm for an aggregate of $82.00 per Qualcomm share, consisting of $60.00 in cash and the remainder in Broadcom shares. This represents a 50% premium over the closing price of Qualcomm common stock on November 2, 2017, the last unaffected trading day prior to media speculation regarding a potential transaction, and a premium of 56% to Qualcomm's unaffected 30-day volume-weighted average price.
- Broadcom is prepared to pay a “ticking fee” providing for an increase in the cash consideration payable to Qualcomm stockholders if the transaction is not consummated by the one-year anniversary of entering into a definitive agreement.
- Broadcom is prepared to pay to Qualcomm a significant “reverse termination fee” in an amount appropriate for a transaction of this size in the unlikely event we are unable to obtain required regulatory approvals.
- Broadcom is willing to agree to a regulatory efforts provision that is at least as favorable as the one Qualcomm provided to NXP.
- Broadcom has fully negotiated commitment papers with its financing sources in an amount sufficient to fully fund the transaction.
- The Broadcom Board is prepared to invite Paul Jacobs and one other current Qualcomm director to join the combined company's board upon completion of the transaction.
The above offer is valid under following conditions:
- Either Qualcomm acquiring NXP on the currently disclosed terms of $110 per NXP share or the transaction being terminated.
- Qualcomm not delaying or adjourning its annual meeting past March 6, 2018.
“This proposal to acquire Qualcomm is extremely compelling compared to any other alternative available to Qualcomm, with or without the acquisition of NXP, and we believe any responsible board would engage with us, without further delay, to turn this proposal into an executed definitive agreement. We continue to hope you choose to engage with us for the benefit of your stockholders,” wrote Hock Tan, President and Chief Executive Officer of Broadcom.
Massive Tech Acquisition
We previously reported how this merger would dwarf Microsoft's over $26 billion acquisition of LinkedIn. Indeed, Redmond's purchase of the business network is only the third largest tech merger. Dell's $67 billion purchase of EMC and Avago's $37 billion deal to own Broadcom top the list.