After a formal rejection by Qualcomm's board of directors on Nov. 13, Broadcom still wanted to 'overpower the bow' and insisted on acquiring Qualcomm, Hock Tan said in a statement that the merger of the two exchanges will create a strong global company with existing The takeover offer is attractive to Qualcomm shareholders, whose response encourages us.
Hock Tan, 65, with a thick Southeast Asian accent, has seen himself rarely on public occasions, speaks slowly, looks friendly, but is a fierce capital predator.
Broadcom CEO Hock Tan
Known as one of the most aggressive M & A takeovers in the global semiconductor industry in recent years, he acquired several more peer companies in a matter of years and led AvagoTechnologies' revenue and share prices more than fivefold After joining Broadcom, Anwar Googol jumped from No. 17 in the previous year to No. 5 in qualifying for the semiconductor industry under the name 'New Broadcom.'
Unlike the technology-focused Chinese of NVIDIA's Jen-Hsun Huang, AMD's Su Tzu Fung and TSMC's Zhang Zhongmou, the Malaysian Chinese, whom financial magazine calls financial geeks, set up its own semiconductor empire through capital operations.
But Hock Tan, who holds a BS and MS degree in mechanical engineering from MIT and holds an MBA from Harvard Business School, also has his own opinion on the semiconductor industry. He believes the semiconductor industry is mature and the semiconductor industry is expected to grow over the next decade Will enter the process of integration from horizontal to vertical integration.
Crazy M & A history
With a series of capital operations, Hock Tan continued to acquire larger semiconductor companies for several years, making Broadcom a giant in the semiconductor industry.
He commented himself at the 2015 HGM Gala Dinner, 'I'm not a semiconductor, but I know how to make money and run'.
According to research by Gartner, an information technology research and advisory firm, Broadcom revenue was $ 13.22 billion in 2016, an increase of 191.1% from $ 4.543 billion in 2015. Among the top 25 semiconductor manufacturers with the largest global revenue in 2016, the rankings fluctuated the most Broadcom, whose market share climbed from 12 places in 2015 to 17 places in the world, ranking fifth in the world.
But it is clear that Hock Tan ambitions more than that.On Nov. 6, the American communications semiconductor chip company Broadcom formally submitted an offer to Qualcomm, the transaction total more than 130 billion US dollars, if successfully completed, will be the largest in the history of the semiconductor M & A case.
While giving the offer to Qualcomm, HockTan, at the helm of Broadcom, mentions in a letter to QUALCOMM's board that the takeover offer is extremely attractive to shareholders and investors in both companies, and in particular to Qualcomm shareholders Brought the stock market gains.Butong said the higher the purchase price of 54.84 dollars on November 2 closing price premium of 28%.
Qualcomm investors prospectus shows that if Broadcom and Qualcomm merger, revenue will reach 51 billion US dollars.No matter Qualcomm and NXP's acquisition case is reached, once the merger, will become the world's third largest semiconductor company, only For Intel and Samsung.
The acquisition of Qualcomm, Hock Tan apparently prepared, he said in a statement, 'We believe that global customers will be happy to see the merger, or we will not launch the tender offer.' For the antitrust investigation, Hock Tan is also confident that we expect the related antitrust or other regulatory issues will not extend the normal timeframe for this type of transaction. "Broadcom said the previously announced headquarters relocation plan further adds to transactional certainty.
It should be noted that the current semiconductor chip company Broadcom is acquired by Avago after Broadcom in 1971, Hock Tan to the United States Massachusetts Institute of Technology (MIT) to study as a semiconductor solutions company ICS CEO, ICS Sold to Silicon Valley Semiconductor Integrated Device Technology and entered IDT.
Avago's history goes back to Hewlett-Packard's components division, which was established in 1961. Hewlett-Packard split the business into Agilent Technologies in 1999. By 2005, Agilent again became part of the semiconductor division Anwar High, which sold $ 2.66 billion to private equity funds KKR and Silver Lake Capital, later invited Hock Tan as Anwar's CEO. In 2009, he led Avago's successful NASDAQ listing and went On the road to rapid expansion of its semiconductor chip business through mergers and acquisitions.
In December 2013, Avago announced a $ 6.6 billion, 41% premium in cash acquisition of storage chip maker LSICorp (LSI) to strengthen its position in the enterprise storage market, when Anwar was not well known in the field The acquisition of the required funds of 1 billion US dollars for Owen high own funds, 1 billion US dollars provided by Silver Lake Capital, there are 46 billion US dollars from a number of bank loans, of which the injection of Silver Lake 7-year convertible Bonds in the form.
In 2015, Avago announced a $ 37 billion acquisition of established chip company Broadcom, including $ 17 billion in cash and $ 20 billion of shares, was also the semiconductor industry's largest acquisition of the time the two companies merged, the new company will be renamed Broadcom Limited (Broadcom Ltd.) For the transaction, Avago raised $ 9 billion in bank financing with cash and shares in hand.
Broadcom was the world's largest maker of WiFi chips at the time, with Broadcom making $ 8.4 billion in revenue in 2014, much higher than the $ 4.27 billion it had at that time, and $ 37 billion being $ 36.3 million more than Avago Of the market value of high after the acquisition is completed, the new company followed the 'Broadcom' name, the stock code is still AVGO, the original Broadcom shares delisted.
Hock Tan did not stop, and within a year, under its leadership, New Broadcom announced a $ 5.9bn acquisition of Brocade, a US data center network provider, at which time it expects to pass new debt financing and cash To provide financing for the transaction since the announcement of the acquisition of Broadcom intention, the U.S. Foreign Investment Commission (CFIUS) at least three postponed for approval on the ground of endangering national security.Analysts said Broadcom in early November announced the headquarters of the business operations back to the United States in order to Shortly after Broadcom announced its move to move the headquarters back to the United States, Nov. 17, Broadcom officially announced the completion of its acquisition of network equipment maker Brocade.
Under Hock Tan's leadership, Avwar shares skyrocketed from more than $ 270 in the 2009 IPO to more than $ 270.
Capital trader
Hock Tan, in the eyes of many, trades more aggressively than its own, and when he decides to acquire a company, he has already thought about what to sell later, how much he can sell, what he can sell What kind of person.After the transaction is completed, immediately reorganization, decisive to sell non-core business and layoffs, focused on improving the company's profitability.
'From the acquisition of Broadcom go through the record, it is not difficult to see the impact of capital for the chip market for all listed chip companies, after all, shareholders or investors still have to explain to see not only revenue, as well as profit and EPS And other performance, these are shareholders and investors are interested. 'Semiconductor Research Institute Tuo Chi Industrial Institute analyst Yao Jiayang told First Financial said.
A resigning Broadcom employee told CBI reporter that two years ago, after Avago swallowed up Broadcom, the original "non-profitable" public relations departments were all laid off. The principle followed in the process is to make money, cut off the business losses, and hope to sign long-term contractual relationship with customers. '' Hock Tan bought Broadcom 25% direct price, if customers do not agree to out of stock. Huawei such a large Customers are also required to place their demand in the coming year ahead of schedule in order to guarantee the availability of the old price. "The departing employee disclosed to First Financial.
One vendor who has served Broadcom confirms the above assertion that after the acquisition of Broadcom by Anwar High ended their order for Broadcom's brand, in addition to the technical industry communications, the new Broadcom has seldom reappeared In the public view, 'Old Broadcom, when many executives in Greater China were also replaced, including some business units,' the supplier said.
In Hock Tan several mergers and acquisitions, there are always a number of consortia around him.In the tender offer for Qualcomm, Broadcom said it has received from Bank of America Merrill Lynch, Citibank, Deutsche Bank, JPMorgan and Morgan Stanley To a "high confidence letter" that will provide the debt financing necessary for the transaction.
Silver Lake Partners, a private equity firm, also provided a $ 5 billion convertible debt commitment to Qualcomm Inc. Silver Lake is one of Broadcom's existing shareholders, Strength has played a key role.
The Broadcom employee said to First Financial Corp. Broadcom's ally KKR has not been publicly announced. However, in the case of semiconductor mergers and acquisitions, the strength of the famous U.S. private equity fund should not be underestimated. Some even joked that Hock Tan was Is KKR's 'Spokesperson' in the semiconductor industry.
Wang Yanhui, secretary-general of China Mobile Alliance, believes that the case of "Double-Purchase" is a reproduction of Broadcom acquired by Anwarch. Although Anwar is small, its profitability is far stronger than that of Broadcom, and the acquisition seems unreasonable. In fact, Normal.He said that from the capital market point of view, the probability of success of the dual-pass case is still great, after all, the acquisition represents the will of the majority of shareholders or capital.
John Wayne, managing director of Key Banc Capital Markets, said in a report that Broadcom's acquisition of Qualcomm is tantamount to 'an impressive masterpiece in financial engineering.'
From 'skinny' to the White House seating guests
Hock Tan, 65, was born in Penang, a Chinese enclave in Malaysia.
Hock Tan, a 18-year-old Hinton, went to Massachusetts Institute of Technology (MIT) in 1971 to study at the time when he arrived in the United States, but at that time he was unable to afford to study in the United States Highly expensive, thanks to MIT scholarships; then, he also received an MBA at Harvard University.
At the White House's Trump awards, Hock Tan said: 'My mother never imagined that one day her son would be at the White House, at the Presidential Office, next to the President of the United States.' And after he finished saying it When, behind him, Trump clutched his shoulder and said, 'My mum is, too.' Hock Tan also talked about the American education system on the spot and gave him the chance to realize his American dream.
He said that in the past few years, the U.S. policy has made it difficult for many enterprises to make global market more difficult. Globalization of the intellectual property rights of some outstanding enterprises and some left the United States, while Trump's substantial tax cuts have improved the business environment, So that the United States 'once again become the best place to lead the global business.' He called himself an American, and the immediate owner of Broadcom, the board of directors and more than 90% of the shareholders are American, 'So we announced that we want Broadcom to go home' , The Broadcom headquarters back from Singapore to the United States.
Hock Tan and wife Lisa Yang
However, apart from tax reasons, some analysts said the move was also aimed at smoothing the Broadcom acquisition of Boca .. The regulatory hurdle set by Trump after taking office made it increasingly difficult for companies outside of the United States to acquire U.S. businesses. Becoming a U.S. company, Broadcom can circumvent related censorship.Markeriesacco, analyst at Jefferies & Co., said: "This decision stems from Broadcom's strategy of seeking mergers and acquisitions and the harder politics of overseas companies acquiring U.S. companies reality.
However, Hock Tan is grateful for his alma mater MIT.
According to the MIT website, in February 2017, Hock Tan and his wife Lisa Yang (former investment bankers) donated more than $ 20 million to the MIT McGovern Institute for Brain Research to establish Autism Research He and his wife have a total of three children, two of whom have autism.
Hock Tan said: 'I am excited to invest in an organization that values multidisciplinary collaboration to solve complex issues such as autism.'We expect that research from our center will have a significant impact on the autistic population. '
Kenneth Hao, Silver Lake's Managing Director and Managing Partner, once commented Hock Tan: 'He has the unique ability to run a big business as if it were a small business.' And anyone who worked with Hock Tan also said that in addition to working In addition, he rarely spend time in other areas, like to use the results to explain everything.
The vertical integration period is coming
Some semiconductor investors on the first financial reporter said that at present the world, the semiconductor industry's growth rate is very low, so companies in this process must take the integration path, 'so simple and crude capital, we should PE (price-earnings ratio) , Revenue, profits have been doing ', squeezing each other, business growth is slow, then think of ways to mergers and acquisitions,' So I think Anwar Buy Broadcom, Qualcomm acquisition of Qualcomm is the capital feast if I stand in this Seat, this ability must also go play this matter (M & A).
Bertone's response also reveals a high level of confidence in its lines, and Broadcom said that Moelis & Company LLC, Citibank, Deutsche Bank, JP Morgan, Merrill Lynch and Morgan Stanley are all Broadcom financial advisors and are represented by Wachtell, Lipton , Rosen & Katz (a world-class law firm) and Latham & Watkins LLP (Raytheon International).
According to a recent report released by the Semiconductor Industry Association (SEMI), the M & A transactions of semiconductor companies in 2015 exceeded 600 billion U.S. dollars, which may be 116 billion U.S. dollars and 93 billion U.S. dollars in 2017 respectively. These mergers and acquisitions are mainly In the mature market to increase the scale and competitiveness.
SEMI said it expects to complete 12 transactions in the global semiconductor industry worth more than 93 billion U.S. dollars in 2017. The largest M & A deal for 2017 acquisition is expected to be a $ 47 billion deal between Qualcomm and NXP Semiconductors.
However, if the deal between Broadcom and Qualcomm is completed, the scale of M & A transactions in 2017 will far exceed the Association's forecast.
Shortly before the tender offer to Qualcomm, HockTan talked about the M & A trend in the semiconductor industry at the 30th anniversary of TSMC, saying that the demand for semiconductor industry grew by more than 30% annually in the 1980s and 1990s. Now a year's growth rate of less than 5%, and GDP growth rate is almost the same, the semiconductor industry to early investors over-remuneration, or the so-called industrial gold rush has ended.
In addition, from the structural point of view, in the 1980s, small start-up companies entered the semiconductor industry. The 1990s started to go public and the small mergers and acquisitions. By 2000, horizontal mergers and large-scale transactions had taken place and the growth rate of the semiconductor industry had dropped. The next decade, the trend of mergers and acquisitions in the semiconductor industry, will move from horizontal mergers and acquisitions vertically integrated mergers and acquisitions, the future of the semiconductor ecosystem will become more and more important.