Chip maker Broadcom slashes bid for Qualcomm Inc by 4% to $117

22 Feb 2018

Microchip maker Broadcom Ltd slashed its bid for Qualcomm Inc yesterday by 4 per cent to $117 billion as it objected to Qualcomm's decision to raise its own bid for NXP Semiconductors NV to $44 billion.

In response, Qualcomm said Broadcom had made ''an inadequate offer even worse,'' setting up a showdown on 6 March, when Qualcomm shareholders will elect an 11-member board and decide whether to hand control to a slate of six nominees put forward by Broadcom.

According to commentators, a tie-up between Broadcom and Qualcomm would be the biggest technology acquisition ever. They point out that the takeover battle is at the centre of a race to consolidate the wireless technology equipment sector, as smartphone makers such as Apple Inc and Samsung Electronics Co Ltd use their market dominance to negotiate lower chip prices.

According to Broadcom, Qualcomm's raised bid would amount to overpaying for NXP and cut its own bid as a result.

''Qualcomm's board acted against the best interests of its stockholders,'' Broadcom said in its statement on Wednesday.

According to commentators, the moves increased the chances that Qualcomm will buy NXP and lowered the chances of a Broadcom-Qualcomm deal, CFRA Research analyst Scott Kessler wrote.

Shares of semiconductor companies have surged after Qualcomm agreed to buy NXP, making its previous offer an effective cap on the share price.

According to commentators, Broadcom's move looks like a last ditch effort to make Qualcomm management look bad and try to save face on a takeover proposal that is not likely to succeed.

Qualcomm shares shot 6.3 per cent when its talks with NXP were first reported and another 2.8 per cent the day the deal was announced, a rare feat for an acquirer.

According to commentators, the NXP deal will diversify Qualcomm away from the slowing smartphone market and the licensing business that has given it so many legal headaches.