After Qualcomm rejected its initial offer, Broadcom still seems aggressive on trying to purchase the chipmaker, now upping its offer price to $121 billion — up from the previous $105 billion buyout price.
The increased offer puts pressure on Qualcomm to succumb to what could be the tech industry's biggest acquisition in history, one that could affect the future of smartphones altogether as Qualcomm's Snapdragon chips power a large percentage of the entire market.
Broadcom Announces New Qualcomm Acquisition Offer
Broadcom is now offering $82 per share, according to its statement, up significantly from the previous $70. Broadcom raised the stakes just a month prior to Qualcomm's annual shareholder meeting, at which it hopes to sweep the entire board clean, as The New York Times reports.
Broadcom says that at $121 billion, this is its "best and final" offer. Should Qualcomm reject it yet again, that would be the end of this whole acquisition story.
"The significantly improved offer, which has been unanimously approved by the Board of Directors of Broadcom, represents a 50% premium over the closing price of Qualcomm common stock on November 2, 2017, the last unaffected trading day prior to media speculation regarding a potential transaction, and a premium of 56% to Qualcomm's unaffected 30-day volume-weighted average price," said Broadcom.
"Any rational board would consider what we've put forward," said Broadcom CEO Hock Tan. Should Qualcomm acquiesce to Broadcom's offer, that would turn it into a tech juggernaut whose products would be present on nearly all smartphones in the whole world. But Qualcomm doesn't seem it'll budge. For starters, Qualcomm's higher-ups aggressively opposes the potential deal. Then there's the matter of it being grounds for an antitrust practice.
However, Tan is confident the deal would pass regulatory investigation.
"We've looked at it hard, we've studied everything," the CEO said in a Bloomberg interview. "There's a very clear road map to completion. We wouldn't have made this bid if we weren't very comfortable."
Qualcomm's management team and board members have unfailingly argued that Broadcom's acquisition is opportunistic since it is occurring during the chipmaker's messy legal battle with Apple, and — more importantly — the offer is too low.
But the newly increased price could convince Qualcomm investors and shareholders to demand that management consider negotiations. Broadcom's offer includes a fee if regulators shoot down the deal, and additional payment if both companies have not reached a transaction for over a year.