While the value of the proposed bid has yet to be made public it is expected that the offer will be in the range of around $70 to $80 per share, valuing Qualcomm at over $100billion.
Reports claim the merger between Broadcom and Qualcomm would create a company with a market capitalisation of more than $200 billion and would be one of the biggest takeovers in technology sector history. The proposed transaction is valued at approximately $130 billion on a pro forma basis, including $25 billion of net debt, giving effect to Qualcomm's pending acquisition of NXP on its now disclosed terms.
The company is inclined to reject the bid as too low and fraught with risk that regulators would reject it or take too long to approve it, people familiar with the matter told Reuters. That marks a 27.6% premium over Qualcomm's stock closing price ($54.84) on 2 November.
Qualcomm shareholders, who have watched their investment sour over the past year in the face of a patent dispute with Apple, would get US$60 in cash and US$10 per share in Broadcom stock in a deal, according to Broadcom's proposal.
"Broadcom's proposal is compelling for stockholders and stakeholders in both companies".
"We would not make this offer if we were not confident that our common global customers would embrace the proposed combination", Mr Tan said. Broadcom primarily focusses on Wi-Fi and Bluetooth chips.
Qualcomm provides chips to carrier networks to deliver broadband and mobile data and is also in the process of closing a US$38 billion bid for automotive chipmaker NXP Semiconductors NV that it made past year.
Broadcom also is waiting on regulatory approval to purchase San Jose's Brocade Communication Systems for $5.9 billion. We will maintain our fair value estimates of $68 for narrow-moat Qualcomm and $203 for narrow-moat Broadcom, but we would probably raise our fair value estimate for Broadcom-perhaps as much as 25%-if a definitive deal were reached.