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The Broader Implications of Broadcom's Bid For Qualcomm

By BenZinga
Capital Markets

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Broadcom Ltd (NASDAQ: AVGO) is looking to acquire QUALCOMM, Inc. (NASDAQ: QCOM) in a deal that would value the stock at $70 per share, or around $100 billion.

Qualcomm’s board of directors will likely find the price tag to be too low and reject the deal, Canaccord Genuity’s T. Michael Walkley said in a Monday note.

The combination of Broadcom and Qualcomm is expected to generate “strong” synergies and create a new “dominant” wireless business that would also be considered to be a global semiconductor leader, Walkley said. (See Walkley’s track record here.)

At $70 per share, Qualcomm would be in a better position as an independent and standalone entity, even when factoring in an ongoing legal dispute with Apple Inc. (NASDAQ: AAPL), Walkley said.

Nevertheless, Broadcom is likely looking at a deal as a means to not only generate shareholder value through synergies, but to increase its exposure to Apple and Samsung’s ecosystem, the analyst …

Read the full story at Benzinga.

Photo: Qualcomm

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