The US semiconductor company Broadcom announced Monday an unsolicited bid for its competitor Qualcomm, for a total amount of 130 billion dollars, which would be one of the largest operations of this type in the tech sector.
The two groups accounted for combined revenues of $ 51 billion in 2017, and a gross operating surplus (Ebitda) of $23 billion, according to the Broadcom statement.
The offer values Qualcomm, an Apple supplier, at $70 per share. Broadcom would pay this sum partly in cash, and partly with its own shares.
The value of $ 130 billion takes into account a debt recovery of $25 billion.
“We are ready to engage in immediate discussions with Qualcomm to sign a definitive agreement and quickly complete this transaction,” said Thomas Krause, Chief Financial Officer of Broadcom, quoted by the statement.
Qualcomm is itself engaged in the acquisition of its Dutch competitor NXP, a transaction valuing the latter at $47 billion. Broadcom stated that its buy-out proposal was valid whether or not Qualcomm was successful in acquiring NXP.
The semiconductor sector is undergoing intense consolidation: the major players in the sector, eager to change scale to better position themselves in an increasingly competitive market, have increased acquisitions in recent years.
In 2015, Broadcom itself was born from the acquisition of the US group by the same name by the US-Singapore group Avago Technologies for $37 billion. The new entity retained the name of Broadcom.
Also in 2015, another American, Altera, was bought by computer chips giant Intel for $16.7 billion.
On Monday, Broadcom’s chief financial officer expressed the hope that a swift approval by the competition authorities over the acquisition of Qualcomm would be obtained, while the latter’s buyout of NXP prompted a thorough investigation by the European Commission.
“Given the complementary nature of Broadcom’s and Qualcomm’s activities, we hope that all the requirements of the authorities can be met in due course,” said Thomas Krause.
Rumors of the unsolicited Broadcom offer had already boosted Qualcomm’s stocks by more than 12% on Friday on Wall Street. In trading before Monday’s official opening, Qualcomm earned 3.70% to $ 64.10, while Broadcom took a leap of 1.62% to 278.05 dollars.