Broadcom is considering making an unsolicited offer to take over Qualcomm for more than $100 billion in what would be the biggest-ever acquisition of a chip vendor, according to multiple reports.
Broadcom, which is based in Singapore but has announced plans to return to the United States, could offer roughly $70 a share in cash and stock “in the coming days,” according to a Bloomberg report Friday. Qualcomm shares opened at $54.76 but shot up more than 12% on the news, valuing the company at roughly $91 billion.
Qualcomm’s stock had steadily sunk this year largely due to its ongoing legal battles in key markets around the world. In April, Nvidia sued Qualcomm in London, alleging it had unfairly forced Nvidia to pull the plug on the Icera business it bought in 2011. Qualcomm also faces a fine in South Korea of $853 million over alleged antitrust violations.
And earlier this year, the FTC filed suit against Qualcomm, accusing it of using anticompetitive tactics to “maintain its monopoly” as the dominant vendor of semiconductors for phones and other mobile gadgets. The agency said Qualcomm imposed “onerous and anticompetitive supply and licensing terms” on hardware manufacturers, violating the FTC Act on several fronts.
Qualcomm in July posted $5.4 billion in revenue in the previous quarter, down 11% year over year, and income fell a whopping 40% due primarily to a patent battle with Apple that began in January and continues to rage. Reports surfaced this week that Apple was considering eschewing Qualcomm chips entirely in its iPhones and iPads beginning next year in what would a major blow for the San Diego-based chipmaker.
A tie-up between Broadcom and Qualcomm could help alleviate the damage from that battle, however. Broadcom also supplies is a major supplier of parts for Apple’s iPhone, and new management might be better positioned to resolve the dispute, Bloomberg noted.
Broadcom is also looking to close its deal to spend $5.9 billion to acquire network gear manufacturer Brocade in a move that would include the recently acquired Ruckus Wireless. It’s unclear whether a marriage of Broadcom and Qualcomm could clear U.S. regulatory hurdles, however.