Could Broadcom Possibly Absorb Qualcomm?

Craig Matsumoto
11/3/2017
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How big can a chip company get? Let's find out!

Broadcom Corp. (Nasdaq: BRCM) is considering acquiring Qualcomm Inc. (Nasdaq: QCOM), according to a report in Bloomberg today. It would probably be the biggest semiconductor merger ever, given Qualcomm's market capitalization of $92 billion.

That valuation is up 14% from yesterday's, by the way -- because that's how much Qualcomm's stock shot up today on the report. Broadcom shares are up 4% on the day, putting its valuation at $116 billion.

Chip giants are merging at a surprising rate. The current incarnation of Broadcom is a combination between the old Broadcom and Avago, a deal worth roughly $37 billion. (See Avago Seals Deal to Buy Broadcom for $37B.)

Broadcom is also in the home stretch of its $5.9 billion Brocade acquisition -- sounds quaint by comparison, doesn't it? -- and announced today that it's moving its headquarters to the US from Singapore. (See Broadcom Heads Home, Clears Way for Brocade Buyout.)

Qualcomm, meanwhile, is in the throes of a big merger of its own, for NXP Semiconductors. That deal was expected to close by the end of this year. (See Qualcomm Makes $39B Bet on NXP.)

A Broadcom-Qualcomm tie-up would make life interesting for Intel Corp. (Nasdaq: INTC) -- which, as long as we're slinging around big numbers, has a market cap of $214 billion. It would put together two of Intel's biggest traditional rivals.

— Craig Matsumoto, Editor-in-Chief, Light Reading

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kq4ym
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kq4ym,
User Rank: Light Sabre
11/16/2017 | 11:04:22 AM
Re: Puts move back to US in perspective
Well, at the least the M&A attorneys will be kept busy with contract negotiations and the IP attorneys busy with the various lawsuits, and who knows how the Apple disputes will turn out.
bosco_pcs
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bosco_pcs,
User Rank: Light Sabre
11/6/2017 | 1:45:11 PM
Re: Broadcom + Qualcomm
Nothing is impossible but my initial reaction on twitter is that things just don't add up when Broadcom's market cap is not larger than Qualcomm by a long stretch.

While the Jacobses are no longer the majority shareholders, it is questionable they & their handpick CEO would want to sell the company for a song. So when you add the premium, it becomes a merger of equal of sort.

Qualcomm still wants NXPI, which is a way for it to diversify beyond wireless.

And one should be skeptical about Broadcom, it is selling BRCD's assets, to Extreme and Arris separately, even before the deal gets approved, let alone consummated.

The only reservation (for a success) is that Broadcom is a result of rollups. So long as the money behind the scene willing to pony up the leveraging dough, it is fine. But we have seen how leveraged buyouts work!

Finally, some said Apple has given its blessing. Perhaps, at some point, if Broadcom could resolve the currrent legal standoff between Apple and Qualcomm. However, if I were Apple management, I'd not any companies with so many crucial technologies (patents) to hold sway. It should have learned the lesson from the current Qualcomm, and to a lesser degree, Samsung previously, so be a bottleneck of my future product rollouts
James_B_Crawshaw
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James_B_Crawshaw,
User Rank: Blogger
11/4/2017 | 2:31:45 PM
Re: Broadcom + Qualcomm
Hock Tan has done a pretty good job so far of delivering EPS growth through M&A. I thought the Broadcom deal was pretty aggressive but this takes the biscuit. I'm surprised AVGO was up on the rumor. They already have a very large exposure to the handset market and QCOM is a pure play. The risk profile will go up significantly. 
Craig Matsumoto
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Craig Matsumoto,
User Rank: Light Sabre
11/3/2017 | 7:11:30 PM
Marvell + Cavium
Oh hey look, there's a story now about Marvell possibly acquiring Cavium. A mere $14 billion. Sheesh, guys, try not to look desperate or anything.  :)

https://www.wsj.com/articles/marvell-technology-group-in-advanced-talks-to-combine-with-cavium-1509744822
DanJones
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DanJones,
User Rank: Blogger
11/3/2017 | 4:54:59 PM
Re: Broadcom + Qualcomm
Maybe if the Trump tax cuts happen it makes sense?
msilbey
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msilbey,
User Rank: Blogger
11/3/2017 | 4:05:53 PM
Puts move back to US in perspective
Repatriating to the US seemed like a big deal move to secure approval of the Brocade deal. This suggests a much bigger agenda with that decision.
Craig Matsumoto
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Craig Matsumoto,
User Rank: Light Sabre
11/3/2017 | 3:37:20 PM
Broadcom + Qualcomm
The headline is basically my initial reaction. (Well, my second, after "WHAT the--?")

I mean, this is nuts, right? Broadcom and Qualcomm themselves are each made up of multiple pieces which probably haven't finished integration -- and in the case of NXP, haven't even started.

Think what it means to integrate all that together. It could take a decade. 
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