Is the $103 billion too small? Pass Qualcomm leans against Broadcom acquisition
(Original title: Broadcom makes unsolicited bid for Qualcomm in largest tech deal in history)
Netease Technology News November 7 news, according to Reuters reported that chip maker Broadcom on Monday issued a proactive tender offer to Qualcomm, bid 103 billion US dollars, thus opening up a possible remodeling of the mobile chip industry, the acquisition of the war.
(Netease Editor's Note: This transaction will have a valuation of $103 billion for Qualcomm, which will include a net debt of $25 billion and a total transaction value of approximately $130 billion.)
Informed sources disclosed to Reuters that Qualcomm will review the proposal, but that the company based in San Diego, the United States, tends to reject the offer because the other party’s bid is too low and full of risk – the regulator may reject it. It will take a long time to approve this transaction, or even to approve it.
Hock E. Tan, chief executive of Broadcom, told Reuters that he would not rule out the dispute over the initiation of proxy rights and persuade Qualcomm shareholders to change board members to accept the offer. Previously, he transformed a small chip maker into a company with headquarters in Singapore and the United States with a market value of 100 billion U.S. dollars.
In the past 10 years, Chen Fuyang completed a series of acquisitions. He said: "We are very cautious. We know what kind of company we are bidding for. We have never cancelled our own acquisition decision. We very strongly hope to cooperate with Qualcomm and reach a mutually beneficial agreement. â€
After the merger of Broadcom and Qualcomm, it will become a major supplier of mobile chips. This year, global smartphone sales are expected to reach about 1.5 billion units. This will also increase the price faced by Intel's transformation. The overlord of this PC chip has been trying to enter the field of smart phones and has recently supplied Apple with a modem chip.
According to Broadcom’s proposal, it will acquire Qualcomm’s all outstanding shares at $60 per share in cash and $10 per share in Broadcom. Including debt, the deal was worth $130 billion. In the past year, Qualcomm’s shareholders witnessed a patent dispute between their company and Apple, and caused the stock price to continue to fall.
Daniel Ives, analyst of GBH Insight, a market research firm, said: “Now both sides are playing a high-risk game.†He believes optimistic Broadcom shareholders want to sell for between $75 and $80 a share. Between dollars. This quote is higher by a 27.6% premium to the closing price of $54.84 on Thursday.
Qualcomm’s chips allow mobile phones to connect to wireless data networks. The company’s stock price broke through 70 US dollars in December 2016 and exceeded 80 US dollars in 2014. On Monday, Qualcomm’s stock price closed at 62.52 USD, up 1.1%, indicating that people doubt whether the transaction will happen.
Broadcom stock price closed at 277.52 US dollars on Monday, up 1.4%. In the intraday trading, the company's stock price hit a record high of 281.80 US dollars.
Any agreement reached between Broadcom and Qualcomm will face strict regulatory review, especially from China. Previously, Chinese companies’ plans to acquire American chip makers were obstructed by US regulators.
Qualcomm sells modem chips that allow mobile phones to send data, as well as communication chips for cars. The chip is built on the "infotainment" system and supports wireless charging for electric vehicles.
Qualcomm also provides chips to operators offering broadband and mobile data services. At the same time, the company spent $38 billion last year acquiring NXP Semiconductors NV, an automotive chip maker, and the deal has not yet been completed.
Broadcom, Qualcomm and NXP have teamed up to control chips for modems, Wi-Fi, GPS and near-field communications. This is a strong market position that may cause concerns to customers such as Apple and Samsung Electronics because of the Bargaining power may lead to higher chip prices. However, the merged company may also have a basis for cost reduction and bring flexibility to lower prices.
Herbert Hovenkamp, ​​an antitrust expert and professor at the University of Pennsylvania School of Law, said that U.S. regulators will work hard to ensure that Broadcom and Qualcomm's transactions will not lead to rising chip prices.
He said: "According to what I know, it seems unlikely that there will be a legal basis to stop this transaction."
Chen Fuyang said that if Broadcom acquires Qualcomm and the latter acquires NXP, the net debt of the combined company may reach $90 billion.
Broadcom said that Bank of America Merrill Lynch, Citigroup, Deutsche Bank, JP Morgan and Morgan Stanley all suggested that they are confident that they can arrange the necessary financing for the proposed transaction.
In order to obtain regulatory approval and raise funds for this transaction, Broadcom’s acquisition of Qualcomm may also spin off Qualcomm’s QTL. Romit Shah, an analyst at Nomura Instinet, said that the transaction is financing up to $25 billion.
As of July 30, Broadcom holds $5.25 billion in cash and cash equivalents. As of September 24, Qualcomm had $35.03 billion in cash. Broadcom also received a letter of commitment from the existing shareholder and private equity investment company, Silver Lake Capital, which promised to provide 5 billion U.S. dollars for this transaction.
Fragile Qualcomm
This year, Qualcomm’s share price fell due to a patent war with Apple. At the same time, Apple may abandon the use of Qualcomm chips on its mobile phones, and Qualcomm may have to increase its offer for NXP.
If Broadcom decides to conduct hostile takeovers, Qualcomm’s governance rules will allow competitors to submit their own list of board member candidates before the December 7 nomination deadline.
Two of Qualcomm's directors, Anthony Vinciquerra and Mark McLaughlin, have been allied with rights defending hedge fund Jana Partners LLC, which promoted the company's board of directors two years ago. Reorganization. Last year, another Qualcomm director, Jeffrey Henderson, was added to the board of directors as a compromise candidate.
As a key customer, Apple may play a key role in Broadcom's acquisition of Qualcomm. Analysts said that if Broadcom can save the relationship with Apple, it will significantly increase the potential return of the acquisition.
Chen Fuyang has a history of reducing the cost of acquired companies. Ed Snyder, an analyst with market research firm Charter Equity Research, predicts that after the acquisition is successful, Chen Haoke will reduce Qualcomm’s waste.
Broadcom plans to move its headquarters to the United States alone, which will prevent the transaction from being reviewed by the Committee on Foreign Investment in the United States, which reviews foreign acquisitions of U.S. assets.
(Liu Chun)
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