Broadcom confident that acquisition is completed within 12 months.
SAN FRANCISCO — Broadcom increased its offer to acquire Qualcomm to about $121 billion, calling it its "best and final" offer to acquire the rival semiconductor vendor.
Broadcom's latest offer is worth $82 per share for each share of Qualcomm stock — a price that Qualcomm's stock has only exceeded for three days in its 26-year history as a public company. The offer represents a 50 percent premium over the value of Qualcomm's stock on Nov. 2, the last day before reports surfaced that Broadcom would bid to acquire the company.
Broadcom said it remains confident that the acquisition would close within about 12 months and is reportedly willing to sell off Qualcomm's Wi-Fi networking processor business and its RF front end business to smooth over any antitrust issues. Broadcom's latest offer includes a "ticking fee"and a "reverse termination fee" due to Qualcomm if the acquisition takes more than 18 months to complete or does not receive regulatory approval.
Qualcomm (San Diego) said in a statement that it's board would review Broadcom's proposal with legal and financial advisors. The company said it would have no further comment until the review is conducted.
Qualcomm's board unanimously rejected Broadcom's original $105 billion bid in November, saying it dramatically undervalued the company. Since then, Qualcomm has taken actions, including increasing employee severance pay, designed to make a deal less palatable to Broadcom.
Broadcom, meanwhile, launched a hostile takeover attempt for Qualcomm in December, advancing a slate of candidates for election to Qualcomm's board. Qualcomm stockholders are due to vote for board members at the company's annual meeting in March.
In a presentation on its website, Broadcom criticized the performance of Qualcomm's management, saying Qualcomm's "business model has been broken for a long time" and that the company's stock has significantly underperformed peers. Broadcom also said that Qualcomm failed to monetize leadership in 4G technology and suggested that the looming transition to 5G would be no different.
Qualcomm's licensing business model has been challenged in recent years by large fines handed by regulatory bodies in the China, South Korea and the European Union, and the company is also battling regulators in the U.S. In addition, Qualcomm remains mired in a high-profile contract dispute with Apple. Qualcomm's stock value declined Monday after analysts speculated that Apple may be preparing to scrap Qualcomm chips in favor of rivals for future iPhones.
Broadcom said its latest offer was contingent on the consummation of Qualcomm's $38 billion offer to buy NXP Semiconductors, which remains in a holding pattern pending approval by China's antitrust regulatory agency. The approval is expected later this month, but speculation is that Qualcomm will have to raise its offer to buy NXP because NXP's stock is currently trading higher than the $110 per share Qualcomm has offered.
In its latest proposal, Broadcom included an offer to allow Qualcomm Chairman Paul Jacobs and other Qualcomm board members to join Broadcom's board of directors.
— Dylan McGrath is the editor-in-chief of EE Times.