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Broadcom offers $103 bln for Qualcomm, sets up takeover battle

Published: Updated:

Broadcom Ltd made an unsolicited $103 billion bid for Qualcomm Inc on Monday, setting the stage for a major takeover battle as the chip maker looks to dominate the fast-growing market for semiconductors used in mobile phones.

Qualcomm said it would review the proposal.

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.

A Broadcom-Qualcomm deal would create a dominant company in the market for supplying chips used in the 1.5 billion or so smartphones expected to be sold around the world this year. It would raise the stakes for Intel Corp, which has been diversifying from its stronghold in computers into smartphone technology by supplying modem chips to Apple Inc.

Qualcomm shareholders would get $60 in cash and $10 per share in Broadcom shares in a deal. Including debt, Broadcom’s bid values the transaction at $130 billion.

GBH Insight analyst Daniel Ives said bullish investors were hoping for $75 to $80 per share.

“Now it’s a game of high-stakes poker for both sides,” he said.

Shares of Qualcomm, whose chips allow phones to connect to wireless data networks, traded above $70 as recently as December 2016 and topped $80 in 2014.

On Monday, Qualcomm’s shares were up 3 percent at $63.71 in morning trading, suggesting that investors were skeptical a deal would happen.

Broadcom shares were flat after hitting a record high of $281.80.