Shares in Qualcomm shot up 12.8% on Friday as rumors swirled that Broadcom was preparing a bid for the chip-maker, despite Qualcomm being embroiled in a legal dispute with consumer electronics king Apple Inc (NASDAQ:AAPL).
Those rumors became fact when Singapore-based Broadcom unveiled a US$60 cash plus shares offer worth US$70 per share; Qualcomm’s shares hardened to US$64.19 in pre-market trading, having closed at US$61.81 on Friday.
Qualcomm said the offer is under consideration but it sounded like it was preparing to man the ramparts when its statement concluded: “Qualcomm has significant opportunities to drive substantial additional value for its shareholders as its technology and product roadmap move into new industries.”
Broadcom said its offer would go ahead whether or not Qualcomm’s long, drawn-out proposed acquisition of Dutch automotive chip-maker NXP Semiconductors NV. Announced almost a year ago, the deal still has not completed, and NXP shares continue to trade above Qualcomm’s offer price.
"Broadcom's proposal is compelling for stockholders and stakeholders in both companies. 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," said Hock Tan, president and chief executive officer of Broadcom.
"This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products. We would not make this offer if we were not confident that our common global customers would embrace the proposed combination. With greater scale and broader product diversification, the combined company will be positioned to deliver more advanced semiconductor solutions for our global customers and drive enhanced stockholder value," he added.
Shares added 1.12% to US$62.50.