The rumors of last weekend have been confirmed today with the announcement of Broadcom’s intentions to buy Qualcomm. Broadcom’s offer is really juicy, since they would pay $70 per share of Qualcomm, almost a third more than they were worth in the stock market last week.
That would mean an agreement valued at $130 billion dollars, and would become the most important acquisition in history in the technology segment.
A gigantic operation in every way
The operation that Broadcom raises is to pay for each share of Qualcomm in two parts: $60 in cash and $10 in shares of Broadcom. That price represents, according to Bloomberg, a 28% increase in the price of Qualcomm shares at the close of the stock exchange on November 2.
Broadcom, a giant of the semiconductor industry, would thus achieve the leading supplier of processors for mobile phones in the market, expanding its catalog – focused on communications solutions, such as Wi-Fi chips, network adapters or Bluetooth chips – notably with the Qualcomm microprocessors that we find in most smartphones in the current market.
36 years ago, Henry Samueli and Henry Nicholas, founded this company that has become one of the most important in the communications segment.
Its 11,000 employees around the world are responsible for the development of all types of chips in this area, and its customer base is huge and includes the big technology companies: Apple, HP, Motorola, IBM, Dell, Asus, Lenovo, Logitech, Nintendo, Nortel or Cisco are some of those customers.
A key moment for the offer
According to analysts at Broadcom, they have taken advantage of a complicated moment for Qualcomm, mainly because their legal battle with Apple could mean that it ceased to be its client. That would imply a loss of business of $2.1 billion dollars per year, and it is at that moment of potential weakness that Broadcom has wanted to make a very attractive offer for Qualcomm, a company that is ironically a leader in the market of mobile processors without manufacturing a single chip.
â€” Alex B. ? (@somospostpc) November 3, 2017
The implications of this acquisition would be enormous at the macroeconomic level, and would make Broadcom the third semiconductor manufacturer in the world behind Intel and Samsung. The agreement would far surpass the previous record in acquisitions in the technological field: in 2015 Dell paid $67,000 billion dollars for EMC.
The impact for customers would be obvious since they would depend more on a single provider, and as Ãlex Barredo pointed out on Twitter, the clear example is Apple, whose iPhone X would have six Broadcom + Qualcomm chips in total.