NEW YORK – Broadcom Limited said on Monday it was offering to acquire rival Qualcomm Inc. in a deal worth about $130 billion, creating a huge player in the semiconductor industry.
“Broadcom’s proposal is compelling for stockholders and stakeholders in both companies. Our proposal provides Qualcomm stockholders with a substantial and immediate premium in cash for their shares, as well as the opportunity to participate in the upside potential of the combined company,” Broadcom president and CEO Hock Tan said.
Broadcom is offering Qualcomm shareholders a combination of cash and stock totaling $70.00 per share, as well as the assumption of debt.
“The proposed transaction is valued at approximately $130 billion on a pro forma basis, including $25 billion of net debt, giving effect to Qualcomm’s pending acquisition of NXP on its currently disclosed terms,” Broadcom said in a statement.
San Jose, California-based Broadcom said its “proposal stands whether Qualcomm’s pending acquisition of NXP Semiconductors N.V. is consummated on the currently disclosed terms of $110 per NXP share or the transaction is terminated.”
Qualcomm said it was studying the deal, which would be the largest acquisition ever in the technology sector.
“The Qualcomm Board of Directors, in consultation with its financial and legal advisors, will assess the proposal in order to pursue the course of action that is in the best interests of Qualcomm shareholders. Qualcomm will have no further comment until its Board of Directors has completed its review,” Qualcomm said in a statement.
Broadcom and Qualcomm both produce semiconductors and other devices used in wireless telephony, supplying components to smartphone manufacturers such as Apple and Samsung.
Qualcomm developed the 3G and 4G technology used in smartphones and is developing 5G technology for the next generation of wireless devices.
“This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products,” Tan said. “We have great respect for the company founded 32 years ago by Irwin Jacobs, Andrew Viterbi and their colleagues, and the revolutionary technologies they developed. Following the combination, Qualcomm will be best positioned to build on its legacy of innovation and invention.”
Shares of Broadcom are up $3.72, or 1.36 percent, to $277.37, while Qualcomm shares are up $0.64, or 1.04 percent, to $62.45 in late afternoon trading on the NASDAQ.