Broadcom is becoming increasingly more likely to up its historic bid for Qualcomm as part of its hostile takeover attempt, Amit Daryanani of RBC Capital Markets wrote Tuesday, adding that the analytics still believes Qualcomm is overperforming in the public market due to the effect of its unsolicited suitor. Broadcom's initial offer for the company from early November amounted to $130 billion including $25 billion in net debt, effectively coming down to a $105 billion proposition that could lead to the most valuable purchase in the history of the tech industry, nearly doubling Dell's $67 billion consolidation with EMC in 2015. The semiconductor firm offered $60 in cash and $10 worth of stock of the combined entity per Qualcomm's share as part of a bid that the approached party claims severely undervalues its business and is unrealistic in several other aspects.
Reports of Broadcom being prepared to up its offer for the San Diego, California-based tech giant have started circulating the industry shortly after the initial approach was made but the company's history of acquisitions isn't indicative of a negotiator that's easy to sway, with its CEO Hock E. Tan having a reputation of a businessman who drives a hard bargain and a portfolio to back it. That background seemingly doesn't mix well with Qualcomm's firm stance that a sale is off the table at any price, with the chipmaker citing major regulatory concerns and an extremely undervalued bid as the main reasons for its unconditional refusal. The offer itself stands irrespective of Qualcomm's pending acquisition of NXP Semiconductors valued at $38 billion, thus being a largely unprecedented move in the M&A space that likely signals Broadcom is confident the deal to buy the Dutch company will go through but may also end up costing it tens of billions if China opts to block the transaction yet its hostile takeover attempt succeeds.
The clash between the two chip giants is likely to be concluded on March 6th when Qualcomm's annual shareholder meeting is set to take place, with its board being up for re-election on that occasion. Should Broadcom successfully install its own directors by convincing enough Qualcomm stockholders to vote for them, it will have all the control of the firm it needs to go through with the consolidation. Any other scenario would effectively see its approach blocked, less Qualcomm's management has an unprecedented change of heart.