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Published: Tue, November 07, 2017
Economy | By Melissa Porter

Broadcom plans Qualcomm bid according to sources

Broadcom plans Qualcomm bid according to sources

It's not a done deal, however.

First reported by Bloomberg, Broadcom is said to be readying an assault on publicly listed Qualcomm and planning to offer shareholders $70 a share.

Japanese telecoms firm SoftBank has already agreed a deal to buy British semiconductor firm Arm, while Intel bought Altera, and Qualcomm has agreed a deal for NXP. It's prepared to launch a proxy battle should Qualcomm spurn the $70-a-share proposal, a person familiar with the matter has said.

The deal represents a 28% premium to Qualcomm's share price prior to rumors of the deal which sent the stocks higher last week. The statement said that there would be no further comment from the company until the assessment was completed.

Wall Street will be watching closely how the deal unfolds.

Broadcom is up 2.31% to $279.95 and Qualcomm is up 4.57% to $64.63.

"We would not make this offer if we were not confident that our common global customers would embrace the proposed combination, and we do not anticipate any material antitrust or other regulatory issues that would extend the normal timetable for closing a transaction of this nature".

"Given Broadcom's press release regarding pursuing a U.S. M&A strategy, we believe Broadcom potentially sees accretion in the Qualcomm Technology Licensing segment".

Qualcomm's chips and patents affect nearly every smartphone model in the world, and Broadcom is offering $70 a share, which is a 28pc premium on Qualcomm's closing stock price last Thursday (2 November) according to a report in The New York Times. We think NXP would also fit in reasonably well under the Broadcom umbrella, but we're surprised that Qualcomm's cash hoard isn't a requirement to fund Broadcom's bid.

There are now 27 buys, 2 holds and no sells on Broadcom with an average 12-month price target of $291.

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