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Chipmaker Broadcom has made an unsolicited bid to buy rival Qualcomm for $130 billion. If the deal is accepted it will be the biggest ever takeover in the technology sector, following a run of billion-dollar consolidation deals in the semiconductor industry.
Broadcom president and CEO Hock Tan said the bid is "compelling for stockholders and stakeholders in both companies," with the combined company able to operate at a larger scale across more product ranges. "We would not make this offer if we were not confident that our common global customers would embrace the proposed combination," said Tan in a press statement. Broadcom is offering a combination cash-and-stock deal of $70 per share for Qualcomm, representing a 28 percent premium over the closing price of Qualcomm's stock on November 2nd.
If Tan can convince Qualcomm's board of the deal's merits, the new firm would become the world's third-largest chipmaker, behind Intel and Samsung. The bid has been carefully timed. Broadcom's shares have risen 60 percent over the past year, while Qualcomm's have faltered as the company's revenues are threatened by a legal battle with Apple over alleged anti-competitive behavior. As of last Friday, Qualcomm's market capitalization was $91 billion while Broadcom's stood at $112 billion. The share price of both firms rose last week as rumors of the bid spread.
