It is reported that consulting large shareholders of Qualcomm, Broadcom consider raising Qualcomm's offer, to provide more of its own stock.Although the time of the new offer is not yet clear, but Broadcom's bid shows that in addition to Threatened to replace the Qualcomm board of directors, they plan to raise prices by Qualcomm shareholders to pressure.According to informed sources, recently Broadcom head Chen Fuyang told Qualcomm shareholders, if Qualcomm to abandon the acquisition of NXP, Broadcom will Will increase the purchase price.In the first round of purchase offer, Broadcom reported $ 60 per share in cash and $ 10 own stock, the total price of 103 billion US dollars.Congress sources said Chen Fuyang is now very clear that if you want to promote the acquisition, Broadcom must further raise its offer price.On the other hand, Broadcom also plans to offer more Broadcom stock for each Qualcomm stock, but the amount increased from $ 10 per share to the number of shares, has not yet been finalized.This solution can reduce Broadcom's acquisition Debt.Analysts predict Broadcom is likely to raise the price to close to 80 US dollars, if Broadcom raise the price and commissioned Book battle, it is likely the shareholders will choose to believe Hock Tan, take this opportunity to exit.
More than 70% of Qualcomm's top 25 shareholders, that is, 17 corporate institutional investors and Broadcom investors, are likely to agree to buy if Qualcomm is unable to cope with declining stocks and falling incomes , For shareholders, this is only their own money from the left pocket into the right pocket only for the acquisition of how to place Qualcomm, Broadcom also plan to Broadcom plans to abandon the royalties charged program to raise the chip sales (10% -20% increase), repositioning Qualcomm's position in the chip market, and using this program to negotiate with Apple to reclaim the market partitioned by Intel.In addition, Broadcom hopes Qualcomm will only serve the major customers in the future, in addition to Apple, Huawei, Samsung other than the business will not do, to increase chip sales profits.
Broadcom expects the combined company's gross profit margin is expected to see 62% and the rate of return of up to 42% of the level of these policies are very much in line with the tastes of shareholders.As Futurum analyst Olivier Blanchard pointed out that science and technology strategy research firm, Qualcomm and Broadcom combined As if assembling two different sets of components into a single clock, there must eventually be a trade-off, in which case the most valuable part of Qualcomm may be discarded. "Qualcomm is not concerned about short-term profits, but more Broad strategy, so the development of products even if there is no profit for a short time anyway.Comparatively, Broadcom is quite good at cutting costs, is a financial-oriented enterprises, because for investors, the performance growth is a good thing , So Broadcom will not want to create something for the long-term future.More and more analysts believe that Qualcomm acquired Broadcom will lose the original essence of innovation, after all, this is not Broadcom CEO Hock Tan way of running a business, two The company's business model and innovation culture are very different.
Even Qualcomm finally agreed to acquire will face many regulatory hurdles
On the other hand, even Qualcomm's final agreement to acquire will face many regulatory obstacles in various jurisdictions.
In revenue terms, the two companies, if combined, will make up the third-largest chipmaker in the world after Intel and Samsung Electronics, and the combined potential alone could give antitrust enforcement agencies hesitation, let alone the U.S. and other National authorities have targeted Qualcomm's patent licensing business, and regulators have blocked several other multi-billion-dollar deals initiated by the two companies: QUALCOMM's acquisition of NXP Semiconductors, the Netherlands, has not yet received EU and mainland China Regulators released at the same time, Broadcom previously acquired Brocade Communications Systems is currently still among the US regulatory authorities.
Regulators will have to consider the combined entity's dominance in the field of smartphones, a key component for Broadcom, which are top providers of Wi-Fi and Bluetooth chips for wireless devices, adding Together accounted for about 60% of the market share, according to market research firm Gartner Inc., the two companies together will occupy 52% of the GPS chip market share Broadcom and Qualcomm are still amplification, filtering and sending cellular radio signal components Competing with other vendors, Qualcomm leads the market in cellular communications chips to nearly 59%.
Sascha Meinrath, a professor of telecommunications at Penn State University, said the merger of the two companies could undermine the interests of consumers, device makers, software programmers and service providers as new entrants have the power to determine which wireless devices are available, Which is not available.
Harry First, a professor at the University of New York and an antitrust lawyer at New York University, said regulators in the United States have paid particular attention to deals that would allow a company to absorb complementary technologies to thwart smaller rivals, for example in the early 2000s when regulators ruled that Microsoft was not in its Windows operating system Bundling Internet Explorer browser is an unfair move to restrain Netscape Communications Co.
Eleanor Fox, an international antitrust law expert at New York University, said the acquisition of Qualcomm by Broadcom may lead regulatory authorities in Europe and China to demand a significant divestment and other actions such as the sale or sharing of intellectual property rights, saying European regulators are eager to protect Innovative expenses continued, and earlier this year European regulators approved a $ 130bn merger between The Dow Chemical Company and DuPont on condition that the latter sell an R & D center.
China, for its part, is also not shying away from using antitrust measures to help local businesses, for example, the Chinese government asked the chipmaker to lower its royalty base in China when it reached a settlement in 2015 with an antitrust probe against Qualcomm Inc. Some Observers believe that this requirement is intended to give Chinese equipment manufacturers an advantage.
Broadcom has said it expects to pass regulatory approval within 12 months of closing the deal, which is not impractical, according to antitrust experts.