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6 November 2017

Broadcom set to slug it out with Qualcomm shareholders

Lisa Wright

In what is already potentially the biggest deal by a country mile to be announced in 2017, Broadcom's informal offer to acquire Qualcomm for USD 103bn looks like it is going to meet with some resistance from Qualcomm's shareholders, who reportedly consider the USD 70 per share offer to significantly undervalue the company.

In what would be the largest deal since AT&T's USD 108bn offer for Time Warner in October last year (which is still waiting on regulatory approval), the potential Broadcom / Qualcomm tie-up may well muddy the waters on other deals which both parties are currently in the process of completing.

As well as its unsolicited offer for Qualcomm, Broadcom is currently in the middle of completing a USD 5.9bn acquisition of US network equipment manufacturer Brocade Communications, which had been subject to review by a number of regulators, including those from the US, China and Japan. However, Broadcom's announcement last week that it would switch its headquarters from Singapore to the US could be said to be extremely timely in light of today's announcement and may also help the Brocade deal get over the finishing line. Qualcomm itself is in the middle of a pretty big deal; its USD 47bn offer for Dutch semiconductor manufacturer NXP is also waiting on regulatory clearance, but this deal won't deter Broadcom from its pursuit of Qualcomm.

I can't recall the last time that a company that was in the throes of such a large acquisition itself became the subject of a takeover from one of its rivals, but it will be interesting to see how this develops. Qualcomm's advisors and bankers are going to be kept very busy over the next few weeks.

LIsa Wright

Lisa Wright, Managing Director, M&A products

A regular blogger on this site, Lisa shares her analysis and opinion on news and trends in M&A, private equity, venture capital and IPOs.

A regular blogger on this site, Lisa shares her analysis and opinion on news and trends in M&A, private equity, venture capital and IPOs.

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