Broadcom Ltd. (NASDAQ: AVGO) has unveiled what it terms its best and final offer for fellow semiconductor vendor Qualcomm Inc. (NASDAQ: QCOM). The unsolicited offer would provide Qualcomm shareholders an aggregate of $82.00 per share, with $60.00 in cash and the rest in Broadcom shares. The offer is an improvement over Broadcom's initial bid of $70.00 in aggregate, which the Qualcomm board rejected (see "Broadcom makes offer for Qualcomm" and "Qualcomm to Broadcom: Get lost").
Broadcom describes its latest bid as a 50% premium over the closing price of Qualcomm common stock on November 2, 2017 (the last unaffected trading day prior to word of its interests leaked through the media) and a premium of 56% to Qualcomm's unaffected 30-day volume-weighted average price.
"Broadcom believes this offer is vastly superior to Qualcomm's standalone prospects, with or without the closing of the NXP transaction, and remains hopeful the Qualcomm board of directors will act responsibly on behalf of Qualcomm stockholders and engage with Broadcom on this offer without further delay," the company said via a press release.
Other terms of the offer include:
- Broadcom says it will pay a "ticking fee" that will increase the cash payable to Qualcomm stockholders if the transaction is not consummated by the one-year anniversary of entering into a definitive agreement.
- The company says it also will pay what it described as a "significant 'reverse termination fee' in an amount appropriate for a transaction of this size" if the proposed acquisition fails to receive regulatory approval.
- Broadcom will agree to a regulatory efforts provision "that is at least as favorable as the one Qualcomm provided to NXP [Semiconductors]," a company that Qualcomm is in the midst of acquiring.
The offer is valid if Qualcomm either completes or terminates the NXP acquisition and does not either delay or adjourn its annual meeting past March 6, 2018. Broadcom has proposed a slate of directors for consideration at that meeting that would favor the proposed acquisition (see "Broadcom's new Qualcomm strategy: Nominate new directors for Qualcomm's board"). The company says it would retain Paul Jacobs and another existing Qualcomm director on a new board if the acquisition were to come to pass.
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