Qualcomm Set To Reject $130bn Bid From Broadcom (ft.com)

Tim Bradshaw, reporting for Financial Times: Chipmaker Broadcom officially unveiled a $130bn offer, including net debt, for Qualcomm on Monday, in what could be the largest tech deal in history. Under Broadcom's proposal, Qualcomm shareholders would receive $70 per share -- $60 in cash and $10 in shares of its rival. It would value Qualcomm's equity at roughly $103bn. Qualcomm is set to reject Broadcom's takeover offer (Editor's note: the link could be paywalled; an alternative source wasn't immediately available), as the US chipmaker views its rival's $130bn proposal as too low and fraught with regulatory risks, people familiar with the matter said. The offer represents a 28 per cent premium over Qualcomm's share price on November 2, after it first emerged that Broadcom was preparing an offer. Broadcom also said that its offer stands whether or not Qualcomm completes its $38bn acquisition of NXP, which has yet to close.

Comments

Re:Alternate Link

[Freshly Exhumed]

The intro, that is...

False

[bill_mcgonigle]

Literally:

This content is for Standard & Premium Digital Subscribers only.

Strange that the offer stands regardless of NXP

[WhatsGoodman]

If the offer is truly the same regardless of whether or not the NXP deal closes, there is a huge incentive for that deal to fall through. If they're paying $130b regardless, it would make no sense for Qualcomm to go through with that deal -- it implies that Broadcom is effectively valuing NXP at $0 and giving Qualcomm's shareholders no value for that asset.

Re:Strange that the offer stands regardless of NXP

[Lanforod]

If the offer is truly the same regardless of whether or not the NXP deal closes, there is a huge incentive for that deal to fall through. If they're paying $130b regardless, it would make no sense for Qualcomm to go through with that deal -- it implies that Broadcom is effectively valuing NXP at $0 and giving Qualcomm's shareholders no value for that asset.

No, it means Broadcom is valuing NXP at roughly the same as what Qualcomm will/may pay for it - so it's a wash.

Re:Strange that the offer stands regardless of NXP

[0100010001010011]

I can't imagine some of the conversations about sourcing and confidentiality that some customers got to deal with through this whole fiasco.

ITAR compliance isn't something that gets glossed over. For example the JSF uses Freescale MCUs. NXP is Dutch. But Broadcom and Qualcomm are American.

We had one of our products rejected (at the request of a competitor) because some of the IP was available internationally.

Re:Strange that the offer stands regardless of NXP

[crtreece]

Broadcom and Qualcomm are American.

The original Broadcom was a US company. When bought out by Avago, but keeping the Broadcom name, they were based out of Singapore. Now they are trying to move back to the US.

Shareholders Should Take It

[bill_mcgonigle]

With Qualcomm execs thinking they can extract percentages of device prices from manufacturers rather than just charging a fair price for a part, and their other aggressive and anti-competitive lawsuits they have going, shareholders should welcome new management before the company goes the way of SCO and Oracle/Java. We've heard Apple is already preparing to jump to Intel for radio silicon and others will rapidly follow, importantly and especially on the high end.

And that's without being a fan of Broadcomm at all - they've been really bad with security, documentation, NDA's and support to the point of shooting themselves in the foot with selling their MIPS platform, etc. into the embedded linux space. I'm willing to bet that their move to Singapore will be good for the ecosystem though.

Re:Shareholders Should Take It

[kevmatic]

If the company goes the way of Oracle, I think the shareholders will be pretty happy but nobody else on the planet will.

Re:Hell no.

[UnknowingFool]

And the multiple fines against Qualcomm by multiple countries had nothing to do with that low price? It's all because of Apple. Sure, whatever.

Due diligence

[sjbe]

THere is also a bunch of due diligence that is going to happen before it closes where Broadcom is going to get access to a lot of proprietary trade secret info.

That's not how due diligence on deals like this works unless one of the parties is thoroughly retarded. This is an unsolicited bid. They don't get to come in and examine everything just because they made an offer to buy. There would be verbiage in the buy/sell offer to allow verification of important details but trade secrets remain guarded until the deal closes. There also would be some non-disclosures with teeth and lots of lawyers involved on both sides.

If the deal fails because of regulators or any other reason then Broadcom walks away with a lot of Qualcomm secrets.

No they do not. And if they did there would be lots of flesh eating lawyers involved soon afterwards.

Re: Strange that the offer stands regardless of NX

[Brockmire]

NXP make FPGA's that are used in many itar projects. It's more of an issue with people.

IP, Licensing, and Parts

[emil]

Qualcomm appears to have made several mistakes with Apple.

When the iPhone 4 first added CDMA capability and was released to Verizon/Sprint/U.S. Cellular, Qualcomm should have negotiated the per-device percentage for their modems, the FRAND for the GSM modems from Infineon that Apple was currently using, and any IP licensing on top of this. There should have been clauses in the agreement for new patents on each side that discouraged them from going to court.

Qualcomm should never have licensed their source code as it appears they did in 2010. Apple is too big to trust with this.

I am guessing that Qualcomm's goal is to extend the per-device percentage onto modems that they did not manufacture (Intel/Infineon). It appears that this practice has ignited the most ire from Apple.

I wonder if the Intel and MediaTek substitute modems can access Verizon's (legacy) CDMA network. I'd also be curious to see how Samsung handles their Qualcomm licensing, since they (like Apple) use a mix of modems.

Re:IP, Licensing, and Parts

[emil]

Qualcomm patents and copyright entirely cover legacy CDMA used by Verizon and Sprint. Apple flat out cannot access those networks without Qualcomm parts. They certainly cannot build their own.

I don't know if Verizon is now accessible by GSM-only chipsets. Sprint certainly is not.

Samsung uses Qualcomm modems in the U.S. and their own (GSM) modems elsewhere. Apple does the same thing.

It might hurt the stock price, but Qualcomm should halt all modem shipments to Apple today.

Re:IP, Licensing, and Parts

[The Cynical Critic]

It might hurt the stock price, but Qualcomm should halt all modem shipments to Apple today.

Yes it may hurt the stock price, but more importantly it's going to drive pretty much all of their customers, including the SoC ones, into the arms of their competitors. What this would show is that anyone who falls out of line and tries to negotiate for more favorable terms and rates can be on the receiving end of a complete production halt to all their devices using Qualcomm parts. No sane company is going to use any hardware from them when there's a risk of something as serious as this hanging over their head. With IP you at least have to go trough the courts to get a sales ban.