Broadcom may acquire Qualcomm amid existential legal battle with Apple

Peter Castro
November 4, 2017

Broadcom is talking with advisers about a potential deal, which would be the biggest ever takeover of a chipmaker.

Should Broadcom launch an offer for Qualcomm, it's not clear whether Qualcomm would be receptive or whether the deal would pass muster with federal antitrust regulators. The unnamed sources also stressed that no final decision has been made, however, so there is still a chance for Broadcom to not proceed with a bid.

Stock of San Diego-based Qualcomm jumped 12.7 percent to close at $61.81. Broadcom stock, meanwhile, is trading up almost 6.5 percent.

San Diego-based Qualcomm Inc.is the target of an unsolicited takeover bid by Broadcom Ltd.

More: Don't want an iPhone 8 or iPhone X?

Qualcomm's latest Apple suit involves Intel
Qualcomm has not alleged that Intel chips violate its patents but claims that the way Apple implements them in the iPhone does. This access was "unprecedented", according to Qualcomm, but Apple insisted it was necessary and Qualcomm agreed.

A change of management at Qualcomm might help resolve the dispute with Apple more quickly, and thereby make Qualcomm's licensing and chip businesses more valuable, according to Sanford C. Bernstein & Co. analyst Stacy Rasgon. Shares are down almost 16% this year due to legal battles with Apple and the loss of royalties from Apple and an unnamed second licensee. It is now incorporated in Singapore and co-headquartered there and in San Jose, California. That would give Qualcomm a market value of $103.2 billion.

It's also unclear what such a deal would mean for Qualcomm's current bid of almost $40 billion to purchase NXP Semiconductors, a deal that's facing stiff regulatory reviews in Europe and opposition from some investors who contend the bid undervalues NXP. Apple, in suing Qualcomm, thinks the company is nonetheless overcharging for use industry standard patents, which the law requires be licensed out on fair, reasonable, and non-discriminatory (or "FRAND") terms.

Qualcomm may soon be extended a way out courtesy of Broadcom, which itself supplies Apple with Wi-Fi and Bluetooth combo chips.

Antitrust officials, who also would have to approve a Broadcom-Qualcomm deal, are still considering Qualcomm's purchase of NXP.

The two companies are already involved in big deals from about a year ago.

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