Wireless component specialist Broadcom confirms its intention to bid on Qualcomm for $ 130 billion.
The consolidation movement in the semiconductor sector is confirmed: the Broadcom group has announced that it wants to bid on Qualcomm, a specialist in communication chips, for $ 70 per share, for a total of $ 130 billion, broken down into $ 103 billion in contributions and $ 25 billion in debt.
The amount of $ 70 per share represents a 28% premium over Qualcomm's share price on Thursday, November 2, before the emergence of the first deal information.
The prices of both companies continued to rise after this announcement but such an acquisition, in addition to representing a record amount, will probably pose several difficulties.
Firstly, Qualcomm is already engaged in a merger with NXP Semiconductors, for a $ 39 billion transaction to get into the segment of components for connected / autonomous vehicles but that poses competitive problems delaying its completion.
Second, Broadcom and Qualcomm have a lot of overlapping activities, including WiFi and Bluetooth components. Their merger will lead to two industry heavyweights in wireless chips and help create a giant that may unbalance the game of competition.
Finally, Qualcomm is the target of multiple investigations by regulators for abuse of dominant position through its aggressive licensing policy, and in full dispute with Apple over license fees, which has led to weakening its profits in the third quarter of 2017 and to worry investors because of the uncertain outcome of this case.
Related: Apple poursuit Qualcomm en matière d'enquête antitrust
For Broadcom, buying back Qualcomm would be an opportunity to access markets such as ARM processors for mobile devices (but also for servers and laptops, more recent trends) and strong intellectual property that accounts for one-third of the company's business. San Diego firm.
It is also a way to relocate firmly to American soil after its acquisition by Avago Technologies in 2015 and the return of its head office from Singapore to the United States, as announced by its CEO Hock Tan at the very beginning of month.
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