The US-based semiconductor manufacturer Broadcom has submitted what it claims to be a final takeover bid for rival Qualcomm.
Worth $146bn, the offer breaks down to purchasing Qualcomm at an aggregate of $82 per share, constituting $60 cash and $22 in Broadcom shares. The deal will also see Broadcom assume $25bn worth of debt from Qualcomm.
In their letter, Broadcom points out that the final deal would be a 50% premium on the firm’s share price on the 2nd of November last year: the last unaffected day of trading prior to media speculation concerning the potential takeover.
In a letter to Qualcomm’s board of directors, Broadcom President and CEO Hock Tan said Broadcom would be willing to pay a ticking fee if the deal was not closed within 12 months of the agreement and were also prepared to pay a reverse termination fee is the deal was rejected by regulators.
Broadcom has also stated that its offer is premised on either outcome over Qualcomm’s proposed acquisition of NXP semiconductors at the current offering price but said that the firm would “immediately” stop unless an agreement has been reached by the time of the company’s annual meeting later this year. Qualcomm director, Paul Jacobs and one other Qualcomm director have also been invited to join the merged board following completion.
The tech giant originally offered shareholders $70 per share in cash and stock but was unanimously rejected by Qualcomm’s board of directors on the grounds it was a significant undervaluation of the company’s prime position within the semiconductor market. Broadcom has since sought to target investors directly, attempting to gain backing for its offer.
On NASDAQ, Qualcomm shares took a dive from $66.4o at market open to $63.94 as of 12:51 ET. The San Diego based company managed to deliver a strong Q1 2018 result despite a 6bn ta charge and 1.2bn fine from the European Commission. It reported a net loss of $5.95bn working out at $4.05 per share on a revenue of 6.1bn, up one percent year-on-year.
In a statement following receipt of the offer, Qualcomm said:
“Consistent with its fiduciary duties, the Qualcomm Board of Directors, in consultation with its financial and legal advisors, will review the revised proposal to determine the course of action it believes is in the best interests of the Company and its stockholders. Qualcomm will have no further comment on the proposal until its Board of Directors has completed its review.”
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