Chip manufacturing is about to get interesting with Broadcom announcing a proposal to purchase rival Qualcomm for $130 billion US dollars.
The bid was announced with Broadcom stating their offer is for $70USD per Share in cash and stock, with Broadcom President and CEO Hock Tan calling the bid ‘compelling for stockholders and stakeholders in both companies’. A successful acquisition of Qualcomm would offer both Qualcomm and Broadcom customers a ‘greater scale and broader product diversification’.
The amount offered is a 28% premium over the closing price of Qualcomm common stock on Friday, and takes into account Qualcomms current bid to purchase NXP, worth $25 billion US dollars.
Qualcomm and Broadcom exist in the same Integrated Circuit manufacturing industry though, Broadcom manufactures chips used for Ethernet, Wireless communications (Wi-Fi, cellular radios) and more including both enterprise and personal devices. Qualcomm is more broadly known for their System on Chip (SoC) offerings, as well as wireless communications. A merger could offer a lot for SoC design.
Broadcom has completed five major acquisitions since 2013. If the acquisition of Qualcomm is successful, the combined company would become the third largest chip maker in the world behind Intel and Samsung both of whom have been jockeying for the top spot over the last 12 months.
There’s no date for when the deal would have to be considered, so it’s a matter of wait and see at this stage.