Broadcom Ltd (NASDAQ: AVGO) has plans to raise its bid to a $120 billion offer for its Qualcomm Inc (NASDAQ: QCOM) takeover attempt, according to Reuters, citing sources familiar with the matter. Broadcom shares rose 3.4 percent on Monday after open while Qualcomm shares were were down 2.2 percent.
Sources said that Broadcom is scheduled to meet with its advisers to finalize an offer to purchase Qualcomm for around $80 to $82 per share, raising Broadcom’s previous offer of $70 per share, which Qualcomm had rejected.
Broadcom’s CEO, Hock Tan, is interested in Qualcomm due to its semiconductor business, which he can leverage to become a major chip manufacturer in the market. This will allow Broadcom to become a major competitor in the business, potentially generating billions and billions more in revenue, and build a 5G network.
The increased bid offer comes ahead as Qualcomm shareholder meeting is scheduled for March 6, when Broadcom is looking to replace Qualcomm’s board of directors by nominating its own.
Broadcom said it is very confident that a deal can be reached within 12 months of signing an agreement. But if regulators are to block the deal, Broadcom plans to offer a higher breakup fee, usually approximately 3 to 4 percent of the deal’s size.
Qualcomm is also in the process of its takeover attempt of NXP Semiconductors for $38 billion or $110 per share. NXP shareholders put the deal on hold saying that Qualcomm’s bid was undervalued. The deal was approved by the European Union, but still awaiting on Chinese regulator approvals
If Broadcom successfully acquires Qualcomm, this will force Qualcomm to abandon its offer for NXP.