I think the issue is that Qualcomm has an offer on the table for NXP Semiconductors. If that deal goes through, the Broadcom bid for Qualcomm is valued at $130 billion. If the deal does not go through, it's $105 billion. There is no way of knowing which is correct at the moment. News sites don't want a headline that reads "Broadcom Bids $105 Billion or $130 Billion for Qualcomm".
By the way, I assume the reason the valuation is different depending on the previously announced merger is because there will be more Qualcomm stock outstanding if the deal goes through.
Company managements always reject unsolicited (aggressive) bids offered directly to the shareholders because they obviously do not like being bypassed. They want to be part of the discussion, so they always advice the shareholders to refuse the offer, unless the bidding company talks with them (and consider a *friendly* bid where they would either reject the offer or usually ask for plenty more money).
Broadcom will probably have trouble acquiring Qualcomm (either in a friendly or aggressive manner), because they are smaller than them in everything but the (current) market capitalization. They would need to swallow too much debt, and while the resulting company would be bigger it would have much higher financial liabilities (it will be financially less healthy).
Current speculative market valuations notwithstanding, Broadcom is half of Qualcomm in both headcount and earnings. Seems it should be the other way around...
That would just drive their share price up. One reason bidding companies provide premiums is due to the rise of share price of the target companies. So, the +28% premium might be clipped to +15% or even +10% eventually. Qualcomm's share price after the bid was announced is at +2.40% and counting. There have even been cases where the share price of the target company rises above the premium, particularly when the premium was not large enough. These usually result in the bidding company withdrawing their offer, because they cannot afford to offer even more money and/or shares.
p.s. Correction : Qualcomm's share price rose +28% since the bid was rumoured (and then officially announced), from 51 USD to 65.33 USD (at the moment), so Broadcom's premium was entirely consumed. The 2.40% number referred only to the share rise of the last day. At its highest earlier today the share reached 65.68, i.e. almost +29% rise from the 51 USD. The market in the last few hours appears to be balancing Qualcomm's share at exactly the +28% premium Broadcom offered, as if they dare them to offer more.
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"Bullwinkle J Moose" - Tuesday, November 7, 2017 - link
Quick trivia question......Are more news sites today reporting a $130 Billion bid, or a $105 Billion bid?
"Bullwinkle J Moose" - Tuesday, November 7, 2017 - link
Who cares, "shareholders of Qualcomm will get $60 in cash!"LOL
Yojimbo - Tuesday, November 7, 2017 - link
I think the issue is that Qualcomm has an offer on the table for NXP Semiconductors. If that deal goes through, the Broadcom bid for Qualcomm is valued at $130 billion. If the deal does not go through, it's $105 billion. There is no way of knowing which is correct at the moment. News sites don't want a headline that reads "Broadcom Bids $105 Billion or $130 Billion for Qualcomm".Yojimbo - Tuesday, November 7, 2017 - link
By the way, I assume the reason the valuation is different depending on the previously announced merger is because there will be more Qualcomm stock outstanding if the deal goes through.Gondalf - Tuesday, November 7, 2017 - link
Some regulators in many countries will have a lot to say about this.It will never happen, too much patents involved.
PeachNCream - Tuesday, November 7, 2017 - link
I heard yesterday that Qualcomm was resistant to the Broadcom offer, but I don't understand all of the details. :(Santoval - Wednesday, November 8, 2017 - link
Company managements always reject unsolicited (aggressive) bids offered directly to the shareholders because they obviously do not like being bypassed. They want to be part of the discussion, so they always advice the shareholders to refuse the offer, unless the bidding company talks with them (and consider a *friendly* bid where they would either reject the offer or usually ask for plenty more money).Broadcom will probably have trouble acquiring Qualcomm (either in a friendly or aggressive manner), because they are smaller than them in everything but the (current) market capitalization. They would need to swallow too much debt, and while the resulting company would be bigger it would have much higher financial liabilities (it will be financially less healthy).
Calin - Tuesday, November 7, 2017 - link
Another AMD-ATI deal? 5 years after, AMD was still paying that debt...peevee - Tuesday, November 7, 2017 - link
Current speculative market valuations notwithstanding, Broadcom is half of Qualcomm in both headcount and earnings. Seems it should be the other way around...Alexvrb - Tuesday, November 7, 2017 - link
Maybe Qualcomm should make an unsolicited offer to buy Broadcom. Just big enough to piss them off, like half their current value.Santoval - Wednesday, November 8, 2017 - link
That would just drive their share price up. One reason bidding companies provide premiums is due to the rise of share price of the target companies. So, the +28% premium might be clipped to +15% or even +10% eventually. Qualcomm's share price after the bid was announced is at +2.40% and counting.There have even been cases where the share price of the target company rises above the premium, particularly when the premium was not large enough. These usually result in the bidding company withdrawing their offer, because they cannot afford to offer even more money and/or shares.
Santoval - Wednesday, November 8, 2017 - link
p.s. Correction : Qualcomm's share price rose +28% since the bid was rumoured (and then officially announced), from 51 USD to 65.33 USD (at the moment), so Broadcom's premium was entirely consumed. The 2.40% number referred only to the share rise of the last day. At its highest earlier today the share reached 65.68, i.e. almost +29% rise from the 51 USD. The market in the last few hours appears to be balancing Qualcomm's share at exactly the +28% premium Broadcom offered, as if they dare them to offer more.