Semiconductor device giant Broadcom Limited on Monday announced a proposal to acquire all of the outstanding shares of smartphone chip supplier Qualcomm Incorporated for $70 per share in cash and stock.
Broadcom said the proposed transaction is valued at $130 billion “on a pro forma basis, including $25 billion of net debt.”
Such a deal, if allowed, would be the biggest technology acquisition ever.
Qualcomm is currently involved in a massive legal battle with Apple.
Apple is challenging Qualcomm’s business practice of charging a percentage of the total price of iPhones and other Apple devices as a licensing fee for its patents.
Under Broadcom’s proposal, the $70 per share to be received by Qualcomm stockholders would consist of $60 in cash and $10 per share in Broadcom shares.
Broadcom said its proposal represents a 28% premium over the closing price of Qualcomm common stock on November 2, 2017, the last unaffected trading day prior to media speculation regarding a potential transaction, and a premium of 33% to Qualcomm’s unaffected 30-day volume-weighted average price.
“The Broadcom proposal stands whether Qualcomm’s pending acquisition of NXP Semiconductors N.V. is consummated on the currently disclosed terms of $110 per NXP share or the transaction is terminated,” said Broadcom.
“The proposed transaction is valued at approximately $130 billion on a pro forma basis, including $25 billion of net debt, giving effect to Qualcomm’s pending acquisition of NXP on its currently disclosed terms.
Broadcom CEO Hock Tan said: “Broadcom’s proposal is compelling for stockholders and stakeholders in both companies.
“Our proposal provides Qualcomm stockholders with a substantial and immediate premium in cash for their shares, as well as the opportunity to participate in the upside potential of the combined company.
“This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products.
“We would not make this offer if we were not confident that our common global customers would embrace the proposed combination.
“With greater scale and broader product diversification, the combined company will be positioned to deliver more advanced semiconductor solutions for our global customers and drive enhanced stockholder value.”
In a statement, Qualcomm confirmed it received “a non-binding, unsolicited proposal from Broadcom Limited to acquire all of the outstanding shares of Qualcomm for per share consideration of $60.00 in cash and $10.00 in Broadcom stock.”
Qualcomm added: “The Qualcomm board of directors, in consultation with its financial and legal advisors, will assess the proposal in order to pursue the course of action that is in the best interests of Qualcomm shareholders.
“Qualcomm will have no further comment until its board of directors has completed its review.
“Qualcomm’s board and management have continued to execute on its strategy to position the company for the next phase of profitable growth by making focused investments to extend its leadership in mobile into new opportunities, while maintaining financial discipline and a robust capital return program.
“Qualcomm has significant opportunities to drive substantial additional value for its shareholders as its technology and product roadmap move into new industries.”