back to article Broadcom confirms $103bn slurp offer for rival Qualcomm

Broadcom has confirmed its multibillion-dollar bid for Qualcomm, revealing more details of the $103bn all-cash-and-shares offer to buy out its rival chipmaker. As reported on El Reg last week, Broadcom's offer comprises $70 per share, which we now know is a fact, and made up of $60 in cash and $10 in stocks. "Given the …

  1. Charlie Clark Silver badge

    Silver Lake Partners, one of Broadcom's private equity backers, has offered $5bn in debt financing for the transaction

    … so we know the whole thing is being driven by wizzy financial engineering from the same people that took Dell private and who, I'm reliably informed, sell magic beans.

    The whole thing is $ 130 bn and that's at not even a 30% premium over Qualcomm's stock price, ie. we can expect the offer to go up. This is stock market froth at its frothiest!

    1. Anonymous Coward
      Anonymous Coward

      "The whole thing is $ 130 bn and that's at not even a 30% premium over Qualcomm's stock price"

      I suspect that great minds are thinking alike here, but how do you reckon that premium? Through Q3 of this year, Qualcomm's market cap has been around $77bn, and that's a 60-70% acquisition premium in my book? The recent uptick in market cap postdates the rumours, so I tend to discount that, YMMV.

      1. Anonymous Coward
        Anonymous Coward

        @ Charlie Clark

        We're both wrong in different respects, because we've made the mistake of trusting the Register. Looking further down the thread, and checking those comments out, it isn't £130bn, it is $103bn. So your maths is right on the facts but not against the article or the referenced $130bn, my maths is wrong in fact, because it does use the Reg's made up number.

        I'll give you 4/10, and myself 3/10. Must try harder.

  2. Anonymous Coward
    Anonymous Coward

    It's a bold move by Broadcom...

    ...and a bad one for customers. The involvement of Silver Lake tell you that the financiers intend to make out like bandits.

    Qualcomm's balance sheet shows a net asset position of a mere $30-35bn. Maybe they've been understating their IP, if the Broadcom offer is fair? But even it you look at market capitalisation, Qualcomm have been bouncing along around $85bn for the past couple of years, and Broadcom still want to pay $45bn more than that (plus deal fees, integration costs, and probable regulatory concessions all totalling perhaps another $5bn).

    The "synergies" of this deal will be negligible, so who's ultimately going to have to pay that $45-50bn premium? You know who.

  3. ARGO

    Run away!

    Broadcom don't exactly have a shining track record in mobile baseband. Developed their own, bought Renesas baseband (itself a merger of NEC and Nokia silicon) to get into LTE, and then closed down the lot.

    But their CEO has changed since they did that, so here we go again.....

  4. Anonymous Coward
    Anonymous Coward

    That produces 90%+ monopoly on wifi chipsets

    That produces a monopoly on quite a few things including wifi and CPE chipsets. I do not see how it will get Eu commission, Chinese, Korean and Japanese approval (it will need all of them by the way).

    Additionally, Qualcomm is a traditional military component supplier, so this will have to get Congress approval in USA in multiple committees - not just the committee on foreign investment.

    I smell a massive stock manipulation under way and/or a hatchet job of some sorts.

    1. Anonymous Coward
      Anonymous Coward

      Re: That produces 90%+ monopoly on wifi chipsets

      I smell a massive stock manipulation under way and/or a hatchet job of some sorts.

      I'm less cynical. I've worked with many company directors, few are smart enough to rig a stock fraud (a tiny handful certainly were, they did, and they've now got the criminal records to prove it).

      The purpose of M&A is not about enriching anybody other than banks and lawyers, it is the corporate equivalent of chewing the cud. Directors should be attending to running their business efficiently, and offering innovative products to customers. But that's hard, and often dull work. Far more exciting to get wined and dined by investment bankers, to talk in breathy terms about "deal multiples" and "exit valuations", along with "synergies" and "new paradigms". So that's what they do - let the core business fester, often crying out for attention and resources, and instead the directors fritter their attention and resources on a value-destroying acquisition.

  5. anothercynic Silver badge

    Which is it?

    $130 billion or $103 billion?

    Several sources claim the former (FT and Engadget being amongst them), others claim the latter.

    Can someone please clarify?

    1. Marketing Hack Silver badge
      Headmaster

      Re: Which is it?

      I heard from within Qualcomm that it was $103 billion, based on a confirmation of $60 cash and $10 in Broadcom shares for each share of Qualcomm, which has a float of 1.475 million shares.

      1. anothercynic Silver badge

        Re: Which is it?

        Thank you! :-)

  6. Marketing Hack Silver badge

    I expect the offer to go higher.

    Right now, it is only about a 20% premium on pre-existing market cap. I'm betting Broadcomm will need to take that up to 30%+ to close the deal.

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