Broadcom's Bid For Qualcomm Concerns Google And Microsoft

Tech giants, Google and Microsoft, are wary of Broadcom’s bid to acquire American semiconductor and telecommunications equipment company, Qualcomm, likely due to competition-related reasons, according to a new report by CNBC, citing a number of sources briefed on the discussions. Earlier last month, Broadcom officially announced its offer to acquire Qualcomm for $130 billion, which consists of $70.00 per share in cash and stock. The Irvine, California-based multinational fabless semiconductor company’s Chief Executive Officer, Hock Tan, said at the time the unsolicited bid was made that the acquisition offer was intended to help Broadcom expand its footprint in the chip market worldwide and grow its broad portfolio of patents.

However, Qualcomm declined Broadcom’s unsolicited acquisition bid a few days later in a concerted decision made by its board of directors due to the consideration that the offer substantially lowers the value of Qualcomm in terms of its current market performance and its future prospects in the mobile category, with CEO Steve Mollenkopf commending the company’s successful endeavors in smartphone, networking, Internet of Things, and general computing categories. In Mollenkopf’s opinion, these successes make Qualcomm’s value higher than the offer made by Broadcom at that time. Shortly after that, it was reported that some Qualcomm investors started pressuring the company’s board of directors to haggle with Broadcom’s unsolicited and rejected offer. The rejection prompted Broadcom to nominate 11 people to replace Qualcomm’s existing board of directors as part of a regulatory protocol in which the government seeks industry input prior to issuing a final decision on a particular deal.

If Broadcom’s nominees get approved and its acquisition bid for Qualcomm pushes through, the prospective deal could have a huge impact on the San Diego, California-based chip maker’s current court battle with Apple Inc. over patent licensing fees. Apple’s existing mobile device offerings currently use Broadcom’s chips as the iPhone maker aims to drift away from its reliance on Qualcomm processors. However, Apple is reportedly willing to settle its legal strife with Qualcomm if the latter is purchased by another company with a smoother relationship with the Cupertino, California-based tech company. It is on this premise that Google and Microsoft have raised concerns over Broadcom’s aggressive move to buy Qualcomm, as both companies heavily depend on Qualcomm chips to power their mobile device offerings running on the Android and Windows 10 operating systems, respectively.

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