Qualcomm is set to face increased pressure from Broadcom, the shark closing in for the kill. Semiconductor rival Broadcom, which first launched a hostile takeover bid in November, will push its offer up to $120bn on Monday.
Broadcom is expected to value Qualcomm at $80 to $82 per share and include a generous break-up fee in the event the deal is rejected by regulators, insiders told Reuters. Communications component maker Broadcom had previously offered $60 per share in cash with $10 per share in stock.
The sum deal would be $145bn, as Broadcom would shoulder circa $25bn of debt from beleaguered Qualcomm. Yet the stalwart semiconductor maker is not likely to see the offer in a positive light, insiders told the FT.
A breakup fee is normally between 3 and 4% of the deal’s value, though Broadcom is slated to tempt Qualcomm with a premium on this figure.
Senior executives at Broadcom were set to meet with advisors on Sunday evening to agree on final details of the bid. Hock Tan, CEO, Broadcom could yet significantly alter the offer terms before going public, sources told Reuters.
Ever bold Broadcom is planning to promote a slate of its own nominees to muscle out Qualcomm’s board of directors when the junior firm’s shareholders meet on March 6.
The chipmakers did not respond to requests for comment on the Reuters reports.
Qualcomm is itself awaiting completion of an acquisition deal; last month EU regulators approved a $38bn takeover of NXP Semiconductors. The senior chipmaker expects Chinese authorities to approve the sale before the end of February. Yet some uncertainties remain as an interested hedge fund has pushed for a higher offer.
The takeover bid comes during a time of intense scrutiny on Qualcomm’s commercial fairness practices, with courts in four nations ordering billions in fines since 2015. Its shares also dipped owing to an ongoing legal dispute with Apple.