Chip giant Broadcom plans to buy 103 billion US dollars Qualcomm

According to foreign media reports, U.S. mobile phone chip giant Broadcom proposed the acquisition of competitor Qualcomm of the United States at a price of US$103 billion on the 6th. If this merger is finally reached, it will become the largest merger and acquisition in the science and technology industry, and will have an important impact on the field of mobile phone hardware. Broadcom proposed on the 6th that the acquisition of Qualcomm at the price of 70 US dollars per share (in cash plus stocks) is equivalent to 103 billion US dollars; if coupled with debt, the total transaction will be as high as about 130 billion US dollars. According to Reuters, Broadcom’s $70 per share bid includes $60 in cash and $10 in stock. According to Bloomberg, the M&A proposal also includes a net debt of US$25 billion. If the merger of Qualcomm and Broadcom is successful, it will be the largest M&A case in the history of the technology industry, surpassing Dell’s US$67 billion acquisition of EMC’s largest scale technology acquisition in 2015. Broadcom hopes to become a significant supplier of wireless communications chips. At present, more than 1 billion smart phones are sold each year in the world, and the market for mobile phone chips is huge. Bertone Chief Executive Officer Tan Hawke said in a statement that this complementary transaction will enable the merged company to have an amazing combination of technology and product and become the leader in the global telecommunications industry, believing that both of its global customers will also Warmly welcome this merger proposal. Broadcom has been preparing for the acquisition for several months. However, some analysts pointed out that the bid of US$70 per share may not be enough for Qualcomm; at the same time, taking into account that both companies have a significant market share in the industry, this acquisition’s resistance from the anti-monopoly regulator is also expected to be insufficient. Will not be small. According to the CNBC report, Broadcom had personally approached Qualcomm on the acquisition, but was immediately rejected. The acquisition of Broadcom requires the approval of Qualcomm's board of directors and shareholders. Qualcomm may recommend shareholders to reject Broadcom's offer. Qualcomm will tell shareholders that if Qualcomm is to be acquired one day, the price will be much higher than $70 per share. However, Tan Hork said that he did not rule out the use of voting agency power to persuade Qualcomm shareholders to replace the board members to help promote the adoption of mergers and acquisitions. From 2012 to 2015, the dominant position in the field of smart phone chips helped Qualcomm's market value surpass Intel many times. However, with the intensification of competition in this area, Qualcomm’s patent licensing model has been repeatedly hit, and Qualcomm’s share price has been sluggish for two consecutive years. At present, its market value is less than half that of Intel. Due to the monopoly of the patent licensing model, Qualcomm has received a high price penalty in several important markets such as China and South Korea. Qualcomm and Apple have also been involved in a huge amount of patent litigation. Qualcomm expects that due to Apple's patent litigation, revenue from patent licensing will decline by 47% to $1 billion in the third quarter of this year, dragging the company's overall revenue down by 13%. Broadcom’s current bid price is higher than the company’s closing price of 27.86% at the closing price of 54.84 US dollars on the 2nd; if it is based on the weighted average price of Qualcomm’s 30 trading days, the premium of the merger is 33%. However, on the third day, Botong wanted to procure Qualcomm news to stimulate the market, Qualcomm shares closed at 61.81 US dollars, soaring 12.71%, if the 3rd closing price, Broadcom M & A premium is only 13.25%. In addition, Broadcom's acquisition of Qualcomm may trigger antitrust concerns. Once Qualcomm and Broadcom merge into one, they will form a giant chip that can control the key parts needed by any smartphone manufacturer. At the same time, Qualcomm is currently in the process of acquiring Dutch NXP Semiconductors, which is also a large chip supplier. If Qualcomm and NXP are incorporated into Broadcom, Broadcom will become the world’s third-largest chip maker after Intel and Samsung Electronics. This means that in order to acquire chip giants such as Qualcomm, Broadcom will also need to undergo a multi-layered review of regulatory agencies in the United States and across the world.