The company Broadcom today launched an offer to buy the rival company Qualcomm, in an operation valued at about 130,000 million dollars and that can lead to the creation of a giant in the semiconductor industry.
The operation, which will be one of the largest in the US technology sector, is being analyzed by Qualcomm, according to the company, which said it will not refer back to the subject until the review is completed.
In a statement released from its headquarters in San Jose, California, Broadcom announced that it is offering $ 70 per share from Qualcomm, consisting of $ 60 in cash and $ 10 in share trading.
Those $ 70 per share mean a 28% increase over the value of Qualcomm shares at the end of last Thursday, one day before the beginning of conjectures about this operation.
At today’s opening on Wall Street, Qualcomm’s shares, which are traded on the Nasdaq, were up 4.2% to $ 64.53, below the price of the offer launched today, while Broadcom’s gained an 2.7%, up to $ 281.02.
Broadcom announced that including debt for about 25,000 million dollars, the offer, which seeks to take control of all shares of Qualcomm, amounts to about 130,000 million dollars.
The two companies are rivals in the manufacture of components for wireless communications. Both are suppliers of companies such as Apple and Samsung.
At the close of its 2017 fiscal year, last September, Qualcomm had a 57% drop in its net profits. In addition, the company is in litigation with Apple for patent licenses.
In its statement, Broadcom maintains that its offer remains outside the negotiations carried out by Qualcomm to buy the semiconductor company NXP, for which it has offered some 39,000 million dollars.
Experts believe that, given the similarity of the Broadcom and Qualcomm business, the operation, if accepted by the latter, will encounter many challenges from regulators.
The operation “will place the merged company into a global leader in communications with an impressive portfolio of technologies and products,” its top executive, Hock Tan, said in the Broadcom statement.
The note says that the firm is ready to undertake “immediately” negotiations with Qualcomm to reach an agreement that is acceptable to the parties.
In the letter addressed to the board of directors of Qualcomm, Tan argues that last August he analyzed this possible merger with executives of the rival firm.
In a statement released today, Qualcomm only indicated that it will value the offer, in consultation with its financial and legal advisors, and will decide based on the interests of the shareholders.
Only after the review is completed will the subject be re-addressed, he added.