Broadcom reportedly eyes Qualcomm in $100bn deal

Broadcom has been one of the more active pursuers of acquisition in recent years, and it’s appetite doesn’t seem to have been satisfied as it apparently lines up a $100 billion shot at Qualcomm.

According to the Financial Times, Broadcom is on the verge of making a move for Qualcomm. At the time of writing there haven’t been any official moves, but sources close to matter believe it will happen before too long. Whether the bid is positively received by Qualcomm or regulators remains to be seen, but this seems to be another expensive chapter of the consolidation story in the semiconductor market.

On the acquisition trial to date we’ve had Qualcomm splashing $47 billion on NXP Semiconductors, Softbank writing a $32 billion cheque for ARM, Analog Devices spending $14 billion on Linear Technology and Intel buying various different business as it builds its credentials in the IoT world. It certainly is a fluid segment, but whether the deal will ruffle the feathers of regulators is almost a certainty.

Between the two businesses there is a bit of overlap when it comes to wifi and Bluetooth technologies. This might prove to be a bit of a stumbling block for the deal, though considering Broadcom needs to make some moves to better prepare itself for the next wave of 5G euphoria, the team might be likely to make some remedies. A combination of the two companies could make a combined entity with a market capitalization in excess of $200 billion.

And it certainly is doing its best to get in the good books of US officials. Only a day or so prior to the Qualcomm acquisition rumours, Broadcom announced it would initiate a redomiciliation process to change the parent company of the Broadcom corporate group from a Singapore company to a US corporation. Even President Trump was invited to the announcement.

“We believe the USA presents the best place for Broadcom to create shareholder value,” said CEO Hock Tan. “We expect the tax reform plan effectively to level the playing field for large multinational corporations headquartered in the United States and to allow us to go all in on US redomiciliation.  However, we intend to redomicile to the United States even if there is no corporate tax reform.”

The move to redomicile in the US might have been viewed as a means to smooth the edges of the $5.9 billion Brocade acquisition which is making its way through the regulatory process, but it would appear Tan has bigger fish to fry now. Whether the move to redomicile has any material impact on the regulatory process remains to be seen, though it certainly helps President Trump follow up on his promise to bring US companies back to the US.

Considering quite a lot has happened since Trump’s victory in the US election, you’d be forgiven for forgetting a few of the campaign promises. One of those promises was to reinvigorate the US job market by bringing US companies back into the US. Success has been limited thus far, though a redomiciliation of Broadcom would be a positive step.

We’re almost positive rubbing Trump the right way to get favour on any potential Qualcomm deal won’t be the primary driver for Tan’s redomiciliation move, but if it is a side-bonus, all the better.