Broadcom submits final $146 billion offer in Qualcomm takeover bid

Updated: The sweetened deal also assumes $25 billion in debt from Qualcomm.
Written by Charlie Osborne, Contributing Writer
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Broadcom has produced a best and final offer to acquire Qualcomm in a deal worth $146 billion.

On Monday, the semiconductor giant offered to purchase Qualcomm for $82 per share, a 50 percent premium on the firm's share price on 2 November 2017 and a 56 percent premium on the last 30 days as a weighted average.

Broadcom went public at the beginning of the company's pursuit of a Qualcomm takeover on 6 November 2017. The tech giant originally offered $70 per share in cash and stock.

US chipmaker Qualcomm rejected the suit, deeming the offer as a "significant undervaluation" for shareholders which did not take into account the San Diego, Calif.-based company's position in the semiconductor space.

Qualcomm's board unanimously rejected the proposed deal. Broadcom then changed tactics, directly targeting Qualcomm investors in an attempt to gain backing for the acquisition.

Under the terms of the final deal, Qualcomm stockholders will gain $60 in cash and the remainder, $22, in Broadcom stock, which equates to approximately $146 billion together with the assumption of $25 billion in net debt from Qualcomm.

At the time of writing, Qualcomm's share price at market close stood at $66.07.

As the acquisition bid has occurred as Qualcomm seeks to finalize its own buyout of NXP Semiconductors, the offer is based on either Qualcomm finishing the deal at a price of $110 per share of NXP, or withdrawing from the acquisition altogether.

Qualcomm is also requested not to delay or adjourn its annual meeting beyond 6 March 2018.

Broadcom has always stipulated that the agreement represents improved value for shareholders by creating a "strong, global company with an impressive portfolio of industry-leading technologies and products."

The company has now taken a stronger stance, claiming that "this offer is vastly superior to Qualcomm's standalone prospects, with or without the closing of the NXP transaction."

"[Broadcom] remains hopeful the Qualcomm board of directors will act responsibly on behalf of Qualcomm stockholders and engage with Broadcom on this offer without further delay," the company added.

In a letter to the Qualcomm board of directors, Broadcom president and CEO Hock Tan said that Broadcom would also be willing to pay a "ticking fee" to stockholders if the deal has not been closed within 12 months of agreement, as well as a "reverse termination fee" to Qualcomm if regulators reject the deal.

Qualcomm director Paul Jacobs has also been invited to join the merged firm's board upon completion.

See also: Qualcomm beats Q1 estimates despite quarterly loss on $6 billion tax charge

"We continue to hope you choose to engage with us for the benefit of your stockholders," Tan said. "However, we will withdraw this proposal and cease our pursuit of Qualcomm immediately following your upcoming annual meeting unless we have entered into a definitive agreement or the Broadcom-nominated slate is elected."

Despite a $6 billion tax charge and a $1.2 billion fine from the European Commission, Qualcomm beat analyst expectations and delivered stronger Q1 2018 results than predicted.

The company reported a net loss of $5.95 billion, or $4.03 per share on revenue of $6.1 billion, up one percent year-over-year. Qualcomm and Samsung also announced an expansion of global patent cross-license agreements.

In a statement, Qualcomm said:

"Consistent with its fiduciary duties, the Qualcomm board of directors, in consultation with its financial and legal advisors, will review the revised proposal to determine the course of action it believes is in the best interests of the company and its stockholders.

Qualcomm will have no further comment on the proposal until its board of directors has completed its review."

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