Broadcom, the acquisitive Singaporean semiconductor firm, has gone public on its ambition to purchase rival Qualcomm, making an unsolicited bid that values Qualcomm at $130bn.
The company is offering Qualcomm stockholders $70 per share, a 28 per cent premium on Friday's closing price.
If Broadcom is succesful, the move would be the world's biggest-ever technology acquisition, eclipsing Qualcomm's own record-breaking bid to buy NXP.
Rumours of a bid gathered pace this morning after the Financial Times claimed to have been tipped off by "two people briefed on Broadcom's plans".
The FT accurately noted that Broadcom was contemplating an offer in the range of $70 to $80 per share, indicating to Qualcomm management and shareholders, perhaps, that they should hold out for $80 per share, rather than accept the opening bid of $70.
The report also notes that, as part of its proposal, Broadcom is willing to honour Qualcom's $39bn deal to buy NXP. This was agreed in 2016, but is yet to be completed due to a continuing antitrust investigation.
Broadcom's bid for Qualcomm is also likely, therefore, to be put through the same anti-trust investigatory process.
Qualcomm didn't comment on the report, but a second FT piece cited other insiders - this time at Qualcomm - who claimed that the company would "prefer" to remain independent and pursue its own growth strategy.
Aggressive Qualcomm has struggled over the past year due to a royalty dispute with Apple.
Legal hostilities broke out when Apple sued Qualcomm for $1bn and halted royalty payments to the company over complaints that Qualcomm was 'overcharging billions' for royalities on technologies that they had nothing to do with.
The cessation of Apple royalties has been reflected in damage to Qualcomm's bottom line in recent quarters. Last week, it reported profits down by 90 percent compared to the same period a year earlier.
A takeover of Qualcomm would also give acquisitive Broadcom a much-needed boost in an area where it is currently lacking: 4G/LTE networking technology.
Speaking to the FT, Patrick Moorhead, an analyst at Moor Insights & Strategy, said: "Broadcom needs LTE and 5G capability that they don't have today.
"That's what this comes down to. What comes with it, though, is a ton of complexity. There is a lot of overlap in WiFi and Bluetooth, which could absolutely raise the ire of the regulators."
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