Broadcom ratchets up pressure on Qualcomm with new acquisition offer

A sign on the Qualcomm campus is seen in San Diego California

Given Qualcomm's roughly 1.5 billion outstanding shares, the new offer values the company at about $120.8 billion.

Qualcomm acknowledged receiving the revised offer and said it would not comment until a review of the proposal is completed. Broadcom's previous $70 per share offer consisted of $60 per share in cash and $10 per share in stock. Qualcomm has told its shareholders that Broadcom's bid is an attempt to buy the company on the cheap. Canaccord Genuity increased their target price on shares of Broadcom from $100.00 to $325.00 and gave the stock a "buy" rating in a research report on Wednesday, January 31st. Broadcom made its latest offer conditional on Qualcomm closing that deal at the current offer price, or walking away from the deal: It's OK with raising its own bid, but doesn't want its target spending any more money.

Qualcomm has yet to officially respond to the offer, and while it might seriously be considering Broadcom's proposal as one it can't refuse, the likelihood is that we will see yet another rejection.

Qualcomm is also requested not to delay or adjourn its annual meeting beyond 6 March 2018.

Broadcom remains in the hunt for Qualcomm, and it's willing to pay quite a bit more than its initial $105 billion offer for the company from back in November.

Broadcom also plans to offer Qualcomm a higher-than-usual breakup fee in the event regulators thwart the deal, according to the sources. It criticized the people that Broadcom and Silver Lake Partners had wanted to put on its board, saying that they were conflicted and had no skills or expertise to offer.

Consumers have a stake in the contest, because Qualcomm is likely to be closely tied to the performance of future handsets - particularly a new generation of wireless technology called 5G - and prices that users may pay.

The price hike steps up the pressure on California-based Qualcomm, the dominant producer of chips for mobile devices, which is set to hold its annual shareholders meeting next month. Our proposal includes substantially more Broadcom stock, which will allow Qualcomm stockholders a greater opportunity to participate in the upside created by the combined company's strategic and operational advantages. Broadcom CEO Hock Tan said at the time he would like to resume the acquisition talk with Qualcomm.

Tan, in the letter, said Broadcom has commitment papers with financiers to fund the transaction and that its board will invite Qualcomm's chairman and one other Qualcomm director to join Broadcom's board after completing the deal.

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