Broadcom Offers to Acquire Qualcomm in Biggest-Ever Proposed Tech Deal

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SINGAPORE — Ascendant semiconductor chip maker Broadcom has made a record-breaking $105 billion bid to takeover faltering rival Qualcomm.

Chips from both brands can be found in most smart phones, including both iPhones and Android devices. As two of the biggest semiconductor chip makers, Broadcom and Qualcomm chips are used heavily in the smart appliance market, from IoT platforms to modems, routers and other technology that connects smart devices.

Earlier this year, Qualcomm Inc. unveiled its new flagship smartphone chip as a connected device chip, aiming to target the growing market for gadgets and smart devices. Among the long list of consumer appliance and electronics lines that connect with the two chip makers’ products, Samsung’s premium line of QLED TVs come equipped with a Qualcomm chipset for Wi-Fi and Bluetooth connectivity, and Broadcom’s IoT platform powers Haier's smart appliances lines.

The combined company would have about 40 percent of the cell phone chip market. Qualcomm is currently the third largest chip maker, and the combined company would remain third.

Broadcom and Qualcomm have trended in opposite directions over the last year, with Qualcomm stock falling as it battles a legal fight with Apple, who sued the chipmaker over alleged software violation agreements. Meanwhile, Broadcom has grown aggressively over the course of several acquisitions. Qualcomm is also in the midst of its own attempted $38.5 billion acquisition of NXP Semiconductor, a chip maker with a focus on internet-of-things ecosystems.

Broadcom is offering Qualcomm $70 a share, 28 percent higher than Qualcomm’s closing stock price on the day before the bid emerged publically, according to the New York Times. As part of the deal, an investment firm that has long backed Broadcom would provide $5 billion in convertible debt to help finance the transaction.

Media reports suggest Qualcomm would likely reject the bid, believing that it undervalues the company.

Any possible takeover of Qualcomm by Broadcom would have to gain approval by antitrust regulators. Last week, Broadcom CEO Hock Tan appeared with President Donald Trump at the White House to announce that Broadcom plans to move its legal base from Singapore to the U.S., a move some have assumed is intended to build political favor for the proposed takeover of Qualcomm.