Qualcomm between rock and hard place (MergerMArket)
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Broadcom’s [NASDAQ:AVGO] USD 130bn unsolicited approach to buy Qualcomm [NASDAQ: QCOM] could be considered one of two things: either the first move of creating a hugely complimentary combination, creating a more comprehensive, ‘stickier’ business for smartphone manufacturer licensees, or a non-starter.
Broadcom’s [NASDAQ:AVGO] USD 130bn unsolicited approach to buy Qualcomm [NASDAQ: QCOM] could be considered one of two things: either the first move of creating a hugely complimentary combination, creating a more comprehensive, ‘stickier’ business for smartphone manufacturer licensees, or a non-starter.
Qualcomm could reasonably reject the approach, citing price and regulatory risk. Yet even if it does, Broadcom is reportedly open to pursuing a hostile takeover – although a lack of co-operation could mean a smooth process is far from likely.
Preliminary analysis of regulatory risks suggests the merger control process will be lengthy and challenging. To begin with, the deal would require filing in the EU, US, China, Taiwan, Japan and Korea such is the global reach of each company.
Broadcom’s USD 70 per share move comes at a time when Qualcomm’s share price is suffering due to an ongoing intellectual property and royalty dispute with Apple [NASDAQ:AAPL]. The dispute negatively impacted the company’s Q4 results, with net income falling 89% year-on-year.
Broadcom has duly pounced.