An unsolicited bid was announced by Broadcom Ltd. on Monday for all outstanding shares in rival chipmaker Qualcomm Inc., with the value set at $70 apiece. The proposed transaction is worth $105 billion, with another $25 billion in outstanding debt, according to the company incorporated in Singapore. It would be the biggest acquisition so far in the technology sector.
The value was determined according to the agreed price of $110 in the target entity's takeover of NXP Semiconductors NV, which was agreed one year ago. Combined fiscal revenues this year, including synergies, are estimated at $51 billion, translating to earnings before interest, tax, depreciation and amortization of $23 billion.
The press release notes $10 per share from the offer would be convertible to Broadcom's stocks. The company puts the premium at 28%, referring to November 2 as the last trading day before leaks about a potential bid. "Given the complementary nature of our products, we are confident that any regulatory requirements necessary to complete a combination with Qualcomm will be met in a timely manner," said Thomas Krause, chief financial officer. The purchase is expected within one year after a deal is signed, Broadcom added.
