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Apple supplier Qualcomm confirms takeover approach by rival Broadcom

07 November 2017

Since publication Broadcom and Qualcomm have confirmed the offer, with Broadcom disclosing that the bid of $70 a share is made up of $60 cash and $10 in Broadcom shares.

It's not a done deal, however.

Broadcom also said that it's offer stands regardless of whether the NXP deal goes through or is terminated.

The company is inclined to reject the bid as too low and fraught with risk that regulators would reject it or take too long to approve it, people familiar with the matter told Reuters.

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"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 chief executive officer of Broadcom.

It was not clear who Broadcom was referring to, but Apple is Qualcomm's biggest customer. The proposed transaction is valued at approximately $130 billion on a pro forma basis, including $25 billion of net debt, giving effect to Qualcomm's pending acquisition of NXP on its now disclosed terms.

Shares of Qualcomm rose about 1 percent in early trading.

Broadcom said BofA Merrill Lynch, Citi, Deutsche Bank, JP Morgan and Morgan Stanley have advised that they are confident that they will be able to arrange the necessary financing for the proposed transaction. Jeffrey Henderson, another Qualcomm board director, was added previous year as a compromise candidate.

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A year ago, the company entered a $5.5 billion agreement to merge with USA network provider Brocade Communications Systems, but that has been delayed while it's scrutinized by the Committee on Foreign Investment in the United States.

Broadcom had $5.25 billion in cash and cash equivalent as of July 30.

Broadcom's proposal was unanimously approved by its Board of Directors.

Industry analysts believe that if Apple does not challenge the deal, it's one hurdle that Broadcom will have cleared.

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Broadcom plans to move its headquarters exclusively to the United States, which would allow it to avoid review by the Committee on Foreign Investment in the United States, which reviews foreign ownership of US assets.

Apple supplier Qualcomm confirms takeover approach by rival Broadcom