Two of the biggest chipmaker in the world is taking the headlines today as a potential merger and acquisition may be on the way. According to sources, Broadcom has been making an unsolicited bid for Qualcomm as an effort to reshape the mobile phone hardware market and industry.
Just recently, the chip-making giant, Qualcomm, has been under immense publicity and pressure from the surfacing patent infringements they have been committing since the dawn of their company; another astonishing news about the chip maker is its long and on-going feud with tech company giant Apple.
According to recent reports, Broadcom has been making a bid for Qualcomm last Monday and the amount is a staggering $103 billion. If the deal commences and both parties agree on the acquisition, then the whole Broadcom and Qualcomm combination can potentially create a $200 billion behemoth of a chipmaker that can rule the
The deal can also potentially remove Qualcomm on its quicksand fight between Apple; according to analysts, the deal can really see a good turn regarding both company’s quarrel which involves fraudulent royalty charges and alleged patent infringement.
According to the Raymond James Equity Research’s Chris Caso, "While Qualcomm is pursuing the dispute in the courts in an effort to maximize the value of its IP, an acquirer wouldn't need to maximize value — an acquirer would only need to settle for a rate that would provide a positive ROI,"
On the other hand, Apple’s CEO Tim Cook on an interview said that "If you back up and look at this, what is happening is that [Korea's Fair Trade Commission] has found Qualcomm guilty and fined them in the past few weeks," and "The Taiwan justice department has found Qualcomm guilty and fined them. The U.S. FTC sued them and has a suit going on. The EU is investigating them. And so I think it's pretty clear that there are problems there."
More Deal Information and Speculation
According to Amit Daryanani of RBC Capital Markets, "Broadcom and Apple have a much more cohesive partnership, in contrast to the hostility and lawsuits you have between Qualcomm and Apple," and "So Broadcom may logically think, and we think it's fair, that they could resolve these regulatory litigation issues more easily than Qualcomm is doing right now."
On the bleaker side, the Chinese regulatory approval can cause a big problem for the whole planned acquisition. The whole is expected to go under intense scrutiny from the anti-monopoly unit of China’s commerce ministry. According to the law firm Faegre Baker Daniels, “This is a critical industry for China and Qualcomm has been fined by the Ministry of Commerce (Mofcom) before so it’s on its radar,”
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