New offer values Qualcomm at roughly $120 billion

Broadcom has increased its bid for Qualcomm by 17%, and is now offering shareholders $82 per share. Investors seemed unimpressed by the offer, sending Qualcomm shares down to $65 Monday morning. Qualcomm recently told investors that its talks with Broadcom actually started 18 months ago, and urged shareholders to reject the offer at the company’s upcoming annual meeting. (More on Qualcomm’s talks with Broadcom.)

Broadcom said its offer is contingent on Qualcomm completing its proposed purchase of NXP for $110 per share, or terminating that transaction. Qualcomm’s offer for NXP has been held up by regulators, particularly in China. Even if China approves the deal, NXP shareholders won’t. They are asking for as much as $135 per share, a 22% premium to Qualcomm’s offer. NXP stock has been trading above Qualcomm’s offer price for months, and only a tiny fraction of the company’s shareholders have tendered their shares to Qualcomm.

Resolution of the NXP situation is not Broadcom’s only condition. The company also said its offer is contingent on Qualcomm holding its annual meeting as scheduled on March 6. At that meeting, shareholders will choose between two proposed board of directors: one put forth by Qualcomm and the other put forth by Broadcom. Broadcom says it is prepared to invite Paul Jacobs and one other current Qualcomm director to join the combined company’s board if the merger is completed.

Broadcom’s new offer would give Qualcomm shareholders $60 per share in cash, the same cash payment the company offered previously. The previous offer included $10 worth of Broadcom stock; now the company is offering $22 worth of Broadcom stock for each Qualcomm share.

Other incentives for Qualcomm shareholders include a “ticking fee” providing for an unspecified increase in the cash consideration payable to Qualcomm stockholders if the transaction is not consummated within one year of the two companies entering into a definitive agreement. Broadcom also said it would pay Qualcomm a significant fee in “the unlikely event we are unable to obtain required regulatory approvals.”

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