Chip maker Broadcom proposed Monday an unsolicited bid to buy rival Qualcomm for $130 billion.
If Qualcomm accepts, the merger would be one of the largest-ever tech industry acquisitions. While Qualcomm announced it has received the offer, it did not reveal if it is interested in Broadcom’s pitch, possibly setting up the scene for a hostile takeover.
“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.”
Under the terms, Qualcomm’s shareholders would receive $70 per share, a 28 percent premium on the stock compared to its price Friday. The deal also includes Broadcom taking over $25 billion in assumed debt.
“Broadcom's proposal is compelling for stockholders and stakeholders in both companies,” Broadcom CEO Hock Tan said in a statement. “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.”
The proposed company would instantly become the third-largest builder of the semiconductor microchips used in mobile phones. Only Intel and Samsung would be larger.
"This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products,” Tan said. “We would not make this offer if we were not confident that our common global customers would embrace the proposed combination.”
The offer was meticulously timed. Shares of Broadcom have increased 60 percent in 2017 while Qualcomm’s stock has sputtered during a prolonged legal battle with Apple.
Shares of Qualcomm rose about 1.2 percent Monday to close at $62.52. Shares of Broadcom hit an all-time high of $279.78 early Monday but fell back slightly to close at $277.52.