The proposal was for $60 in cash and $10 in Broadcom stock for all outstanding shares of the San Diego-based wireless technology pioneer. The transaction would be valued at $130 billion.
“Our proposal provides Qualcomm stockholders with a substantial and immediate premium in cash for their shares, as well as the opportunity to participate in the upside potential of the combined company,” said Hock Tan, president and CEO of Broadcom. “This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products.”
“We would not make this offer if we were not confident that our common global customers would embrace the proposed combination,” he added.
Qualcomm confirmed that it had received the unsolicited offer, which was announced half an hour before financial markets opened in New York.
“The Qualcomm board of directors, in consultation with its financial and legal advisors, will assess the proposal in order to pursue the course of action that is in the best interests of Qualcomm shareholders,” the company said in a statement. “Qualcomm will have no further comment until its board of directors has completed its review.”
Bloomberg reported that Qualcomm views the offer as undervalued and will recommend that shareholders reject the takeover bid.
Qualcomm’s stock was up over 3 percent at nearly $64 in early trading in New York, but remained under its 52-week high of $72.
“We have great respect for the company founded 32 years ago by Irwin Jacobs, Andrew Viterbi and their colleagues, and the revolutionary technologies they developed. Following the combination, Qualcomm will be best positioned to build on its legacy of innovation and invention,” said Tan.
Broadcom is based in Singapore, but it is moving its headquarters to Silicon Valley, and has its major U.S. operations in Orange County.
The company promised that Qualcomm employees would have “outstanding opportunities for leadership and growth” in Broadcom, and argued that “as a result of enhanced scale, reach and financial flexibility, the combined company will benefit from the ability to accelerate innovation and deliver more advanced semiconductor solutions to its broad global customer base.”
Qualcomm has been embroiled in a licensing battle with Apple and antitrust complaints from foreign governments that have depressed sales and earnings over the past year.
Buying Qualcomm would make Broadcom the third-largest chip maker, behind Intel and Samsung, according to Bloomberg. The combined business would be the primary provider of components needed to build each of the more than a billion smartphones sold every year.