Broadcom made an unsolicited bid last week to buy Qualcomm in an effort to become the dominant supplier of chips used in the 1.5 billion or so smartphones expected to be sold around the world this year.
Qualcomm's board of directors could meet as early as Sunday to review the unsolicited acquisition offer and decide on its strategy, the sources said.
Broadcoms offer was for $70 a share valuing Qualcomm at just north of $100 billion dollars (the deal would include $25 billion of debt). Under the terms of the deal, shareholders of Qualcomm would get $60 in cash and $10 in Broadcom's stock for each share, which would be a 28% premium over the price of a Qualcomm share on November 2, 2017. 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 now disclosed terms.
Broadcom said it would seek to engage with Qualcomm's board and management, adding that it had received positive feedback from key customers and stockholders.
"We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G", he said, referring to the fifth-generation wireless networks in the works. That's all without touching on Qualcomm's current legal spat with Apple, too, which might throw a wrench into some of these plans.
Last week we reported that Broadcom was looking to purchase Qualcomm for $105 billion United States dollars. Instead, there's this talk about the true value of Qualcomm's business. They've said they're still committed to merging the companies, which might mean we'll see a significantly larger offer or some other more aggressive tactics. Qualcomm itself is in process of taking over NXP Semiconductor. Broadcom has indicated it is willing to acquire Qualcomm irrespective of whether it closes the NXP deal.
The right price for Qualcomm could be between $80 and $85 per share, and Broadcom could go up to $90, Susquehanna analyst Christopher Rolland told Reuters.