Broadcom is apparently considering making a bid of over $130 billion to acquire rival chipmaker Qualcomm.
The company is currently in talk with its advisors about the deal according to those familiar with the matter and it plans to offer around $70 a share and this would include both cash and stock.
Following the news of the potential deal, Qualcomm's shares rose by 19 per cent during intraday trading and closed at 13 per cent at $61.81 which puts the value of the company at $91 billion. Broadcom's shares also rose by 5.5 per cent giving it a market valuation of around $112 billion.
The company's president and CEO Hock Tan believes that the deal is compelling for the stockholders and shareholders of both companies and explained the reasoning behind Broadcom's bid, saying:
“We would not make this offer if we were not confident that our common global customers would embrace the proposed combination.”
If Broadcom does in fact acquire Qualcomm, it will become the world's third-largest chipmaker after Intel and Samsung.
The timing of the deal also takes advantage of Qualcomm's recent legal dispute with Apple over a potential software contract breach and rumours that the iPhone maker may be moving away from using Qualcomm's chips in its 2018 devices.
There will likely be more news regarding the deal between Broadcom and Qualcomm this week and if the chipmaker accepts the $130 billion bid, it will still need to be approved.
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