Broadcom marry Qualcomm Behind the Scepter: Chinese mergers Mad Men and friendly

American chip giant Qualcomm's board of directors really rejected Broadcom's 100 billion dollar merger proposal.

On November 13, Qualcomm officials issued a statement rejecting Broadcom's proposed acquisition of Qualcomm for $ 130 billion in cash and shares on November 6. Qualcomm chairman Paul Jacobs said: "The board of directors agreed that Broadcom's proposal was grossly underestimated Qualcomm leadership in the mobile technology industry, but also underestimated the prospects for the future development of Qualcomm.

But it's hard to shake the market confidence in the success of Broadcom. 'When (Broadcom) has begun to yell, everything is ready.' A semiconductor industry commented on Bertone's high-price acquisition of Qualcomm.

The industry's confidence in Broadcom stems in part from Broadcom's successful history of growth through mergers and acquisitions and partly from Hock Tan (CEO) of Broadcom CEO (CEO).

The 64-year-old Chinese, a rare move on the road to mergers and acquisitions since Avago, one of the predecessors of the company in 2006, took the helm of Avago.

M & A M & A

Dramatic means that the birth of Anwar, was originally a product of continuous spin-off.

If you keep going back, Avago's predecessor, or separated from the IT giant Hewlett-Packard Agilent Semiconductors.

Hewlett-Packard's own business line is extremely large, the adjustment of the layout of things have occurred in 1999, HP chip-making, electronic measurement and analysis of this part of the business spin-off from the establishment of Agilent.In the end of 2005, Agilent's semiconductor sector by the well-known investment institutions Kohlberg Kravis Roberts (KKR) and Silver Lake Partners acquired for $ 2.66 billion and became an independent company called Avago Technologies.

In 2006, just won the Anwar high, KKR invited the protagonist of this article - Chen Fuyang as CEO, Anwar has therefore continued to grow.

In 2009, Avago listed on Nasdaq.

Under the leadership of Chen Fuyang, Avago also opened a period of what can be called a crazy mergers and acquisitions Daguai.

In 2013, Avago bought a veteran chip supplier LSI from the United States for a consideration of $ 6.6 billion, leaving behind its core storage product line and selling non-core assets.

At that time, LSI's annual revenue was slightly higher than Anwar, but it did not weaken Chen's determination to rely on huge loans and old shareholders, Silver Lake Capital, to successfully complete the merger.

Chen Fuyang once again demonstrated his radical style in 2015. Avago eats the old chip company Broadcom at a cost of 37 billion U.S. dollars in the 'snake swallow' gesture, which was the largest M & A deal in the semiconductor industry at the time M & A gave the market a taste of the adventurous spirit of Chen Fuyang, when Broadcom's annual revenue was 84 billion US dollars, almost twice as high as Avago, while the acquisition price of 37 billion US dollars even exceeded the market value of Anwar.

And, after the acquisition, the new company retains a much louder Broadcom brand, although Broadcom's stock has actually been delisted from the US stock market.

The performance of this snake-like elephant, the new Broadcom to become the world's fifth largest semiconductor company, ranking in the Intel, Samsung, TSMC and Qualcomm, the chip industry has become a heavyweight player.

Chen Fuyang and U.S. President Trump

'Financial origin'

As early as 2006, when Chen Fuyang was at the helm of Anhua Gao, Dick Chang, the former chairman of Anwar High, made a comment on Chen Fuyang 's outstanding leadership ability to promote the company's growth through sound strategic positioning and strategy implementation. The ideal person to continue its completely independent process after the company successfully transformed itself. "

According to a number of foreign media reports, Chen Fuyang is a Chinese of Malaysian origin and Chen Fuyang is his Chinese name. He was born in a not-for-granted Chinese family and obtained his chance to study in the United States by studying for a MIT scholarship. This experience, Chen Fuyang grateful, after his fame became MIT donated over 20 million US dollars.

Anwar Gao's passport states that Chen Fuyang holds a master's degree in mechanical engineering from MIT and an MBA from Harvard University. He used to be Commodore International's vice president of finance and has held senior management positions at General Motors and PepsiCo. Industry, ICS, a semiconductor solutions company, and IDT, a Silicon Valley semiconductor company, and is a founding partner of Pacven Investment LLC in Singapore and worked as the general manager of Hume Industries in Malaysia.

Chen Fuyang is not a semiconductor science class background, he also likes to emphasize that he is' financial background. 'There are reports that two years ago, Chen Fuyang at the annual dinner of the Hynix Semiconductor Association once commented himself,' I am not a semiconductor, but I know how to make money And business. '

Regarding the character of Chen Fuyang, there are some American media that call it a common shyness for Chinese, for example, Chen Fuyang is very low profile, rarely appears in the media coverage, often appears in the company's pass.

However, a Broadcom employee talked about the impression of Chen Fuyang to the surging news reporter that "the target was clear and fast and accurate." When Anwar acquired Broadcom, I was laid off and our department did not make any profit. It was laid off.

Although the market also questioned its emphasis on research and development, too radical voice, but under the leadership of Chen Fuyang, Broadcom's market capitalization has reached as high as 110 billion US dollars, the chip line of business covers smart phones, set-top boxes, wireless WiFi and many other areas, 200 times PE, also proved the market as a whole recognized the company.

In contrast, Qualcomm market value of about 92 billion US dollars, PE is 24 times. If calculated by 24 times PE, Broadcom market value is a fraction of Qualcomm.

Chen Fuyang's friendly

Of course, in the battle to buy Qualcomm, Chen Fuyang is not alone.

According to Bloomberg quoted people familiar with the matter, Silver Lake Capital will spend 2.5 billion U.S. dollars in support of Broadcom proposed acquisition of Qualcomm.This is Silver Lake Capital has promised to provide this huge deal of convertible bonds to raise $ 5 billion part of this The $ 5 billion plan is also the largest deal in Silver Lake's history.

Public information shows that Chen Fuyang and Silver Lake have been fighting side by side for a long time, Avago acquired LSI, later acquired Broadcom, behind the Silver Lake figure in March of this year, Silver Lake and Broadcom together, to Toshiba filed $ 17.9 billion Purchase proposal

One of the world's largest technology-based private-equity firms, Silver Lake now owns about $ 39 billion in managed assets and raised $ 15 billion earlier this year.

Not only Silver Fox Capital, previously mentioned in foreign media reports, Chen Fuyang's friendly, should also include those in Qualcomm and Broadcom have holdings of the body.Allegedly occupy nearly half of Qualcomm's 17 institutions near, Qi Cheng also owns Broadcom shares.

Some analysts believe that given the recent Qualcomm regulators and customers have been squeezed by multiple parties, Chen Fuyang proposed changes in patent licensing program strategy should be attractive and Qualcomm in the field of modem chip leader, and in the field of wireless wifi chip Broadcom leading, there is a certain degree of complementarity, integration costs will not be too high.

Chinese capital involved in the opportunity?

In addition, Shanghai Prudential CEO Shi Chengbin said in an interview with surging news reporters: "I think it is not ruled out the possibility of involvement of Chinese capital. Behind the chip is the game of national strength. The acquisition of Qualcomm Broadcom, provides an excellent Chinese capital intervention Chance

Shanghai Gaotong is a technology company specializing in Internet of Things solutions, with business cooperation with Qualcomm and NXP.

'Broadcom mergers and acquisitions Qualcomm is bound to obtain the approval of Chinese government antitrust Caixing, China in the past want to buy their chip business, they are not sold to us, this is seeking us, then some of the business may be sold to China.' Shi Chengbin think so.

When Qualcomm acquired NXP in 2016, China Capital successfully acquired NXP's standard products business.

In February 2017, Beijing Jian Guang Asset Management Co., Ltd. and NXP Semiconductors jointly announced that NXP Semiconductors standard products business unit has completed the delivery, the transaction amount of 2.75 billion US dollars (about 18.1 billion yuan).

CCB Asset Management is an asset management company specializing in the investment and mergers and acquisitions of the IC industry and strategic emerging industries. The parent company is CCC Capital Management Co., Ltd., which has a background of state-owned assets.

"NXP standard parts are of very good quality and the products are in the leading position in the industry. Applications include automotive electronics, industrial control, telecommunications, and consumer electronics," said Shi Chengbin.

Purple Light Group has repeatedly launched the acquisition in the United States, but eventually have been crashed for political reasons.

NXP's standard products business, which includes discrete devices, logic devices and PowerMOS products, includes NXP's two fab manufacturing facilities in the UK and Germany, and three seals in China, Malaysia and the Philippines in addition to the design division Testing plants and the NXP Industrial Technology Equipment Center in the Netherlands, as well as all relevant patents and technical reserves for the standard products business.

Some analysts believe that if the United States asks the Chinese side, coupled with Chen Fuyang has always liked to divest the acquired assets for sale, the Chinese capital may find some suitable assets.

Gu Wenjun, chief consultant of core research think Broadcom past acquisitions are spin-off, the customer prices, forcing customers to sign the financial operation of the downstream customers, especially Chinese customers is very unfavorable, China should reject its mergers and acquisitions.