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Broadcom is preparing to reveal an unsolicited offer to buy Qualcomm for as much as $70 a share in cash and stock tomorrow morning, in a bold bid to become the main supplier of communications chips to the wireless industry.

Meanwhile, Qualcomm will argue that the proposal, the largest-ever technology acquisition, undervalues the company and is an opportunistic move to buy the chipmaker on the cheap, the people said.

Broadcom’s $100 Billion Bid

The $70 a share bid, equal to more than $103 billion, will include at least 75 percent in cash, and will also include Broadcom's willingness to have Qualcomm complete its pending acquisition of NXP Semiconductors for more than $38 billion in cash.

While Qualcomm’s board and management will give the offer due consideration, the San Diego-based company will probably recommend that shareholders reject it, the people said. This would force Broadcom to pursue a proxy fight if it decides to keep up.

Thus, the company is expected to strongly resist Broadcom's proposal. People close to the company expect it to indicate the offer price of $70 is far below what it would expect in a takeover. In addition, Qualcomm is expected to raise concerns that any combination with Broadcom would raise significant antitrust concerns.

A Qualcomm spokesman declined to comment, and Broadcom didn’t immediately respond to a request for comment.

Qualcomm's stock, traded on the Nasdaq, surged by more than 12 percent on Friday amid speculation that Broadcom was preparing a bid. It finished the session at $61.81.

FSMNews

The combination of Broadcom and Qualcomm would create a colossus that controls key pieces required for any company that wants build a smartphone.

Meanwhile, Qualcomm is in the process of acquiring NXP Semiconductors NV, another major chip supplier. If those two join Broadcom, it would be the world’s third-largest chipmaker, with huge sway over the supply chain for phones and a growing presence in connected cars and data centers.

If Broadcom could ultimately succeed in convincing Qualcomm’s board, its shareholders and regulators of the merits of the merger, it will cap a stunning run of multibillion-dollar deals for the semiconductor industry in general and Broadcom in particular. 

If completed, it would be the biggest ever takeover in the technology sector and create a company with a combined market capitalization of more than $200 billion.

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