Early on Monday, Broadcom announced that it was launching a $105 billion bid for Qualcomm. Should the takeover bid go ahead, it will be the largest merger battle in the chip-making industry as these are the dominant chip makers at the moment. At the moment, Qualcomm is facing a battle to survive. It is currently involved in an ongoing battle with Apple. The company is also fighting an antitrust investigation that was launched in Europe last month. These are some of the battles that the onetime leader of the semiconductor industry is facing. Broadcom, on the other side, has experienced tremendous growth over the last one decade. This has been made possible by the voracious deal-making attitude that it has adopted in the last few years. Should the two companies come together, they will form an indisputable industry that has been characterized by the smartphone technology. For starters, these two companies are responsible for creating chips that are used in the newest Android models and latest iPhones. The fact that Broadcom is bidding on Qualcomm is an indication of how fortunes can change in a period of 10 years. Qualcomm is considered as the earliest company to invest in the cellphone chip technology.
During the last 12 months, Qualcomm shares have fallen by 20 percent. In fact, they have been on the decline until it was reported that Broadcom is contemplating buying the company. The company also sued Apple last week where it claimed that the iPhone maker had violated some software agreements. During the summer, iPhone sued the company in charges that were related to an illegal business model. Broadcom existence has its roots in a former department of the computer maker Hewlett-Packard. It can be attributed to the Avago Technologies leadership. For starters, this is a company that went public in the 2009. Before this period, the company used to be owned by KKR and Silver Lake. The latest deals have been made possible by Hock Tan, who is the current chief executive of the company. At the moment, Qualcomm is known for a number of patents and wireless chips that are used by almost all smartphones on the globe. Should the deal go through, each Qualcomm share will be bought at $70. Silver Lake has agreed that it will avail $5 billion that will come inform of convertible debt. This capital is supposed to finance part of the proposed transaction. However, Qualcomm didn’t hesitate to reject the offer.
