Multinational semiconductor giant Broadcom Limited officially launched a bid of $130 billion for Qualcomm, the company confirmed on Monday. The offer was introduced in a public manner and includes $25 billion of net debt, valuing Qualcomm at $70.00 per share, a premium on the $61.81 mark on which Qualcomm ended after trading was concluded on Friday. The San Diego, California-based chipmaker is likely to see its stock surge in value later today, especially as the $130 billion offer stands irrespective of Qualcomm's attempted acquisition of NXP Semiconductors, a Dutch chip company for which the American tech giant bid approximately $38 billion but has yet to have the deal approved by the European Commission. It's currently unclear for how long was Broadcom considering the bid, with initial reports on the matter having only emerged late last week.
Broadcom proposed a relatively traditional transaction that combines cash payments and stock, with $60 of the proposed stock valuation being paid in cash and the remaining $10 issued to Qualcomm's investors as shares of the combined entity. Broadcom Chief Executive Officer Hock Tan described the move as a strategic attempt on the company's part to strengthen its position in the global chip market and further increase its already vast portfolio of technologies and patents. If agreed and approved, the deal would see the consolidated company become the third largest chip manufacturer in the world behind Samsung and Intel as a result of the largest acquisition in the tech industry ever that's nearly twice as valuable as Dell's $67 billion takeover of EMC in 2015.
The deal also has major implications for Qualcomm's existing legal battle with Apple over standard-essential patent licensing; while the iPhone maker is presently said to be in the process of transitioning away from Qualcomm's technologies, its products heavily rely on Broadcom's offerings and it may be prepared to settle the dispute more quickly if Qualcomm is acquired by a company with whom it enjoys more stable relations. The unsolicited bid is expected to be rejected by Qualcomm who will also recommend its shareholders to dismiss it, Bloomberg reported on Monday, citing people familiar with the company's plans. Qualcomm officially confirmed the receipt of the non-binding bid and said it's presently in the process of reviewing it with its counselors but gave no further comments on the matter.