Chipmaker Broadcom Ltd. is considering raising its offer to buy rival Qualcomm Inc. by offering more of its own stock, following consultation with several of Qualcomm’s top shareholders, Reuters reports, citing people familiar with the matter.
While the timing of the new offer is uncertain, Broadcom’s bid preparations indicate that it is planning to apply pressure on Qualcomm to engage in negotiations by offering more to its shareholders, in addition to threatening to replace its board of directors.
Broadcom’s chief executive Hock Tan has stated he is open to launching a takeover battle and sources have previously said the company is preparing to submit a slate of directors by Qualcomm’s Dec. 8 nomination deadline. Qualcomm shareholders that want the company to engage in deal talks with Broadcom will be able to vote for that slate at a March 6 shareholder meeting.
Broadcom has offered to pay US$103 billion for Qualcomm, made up of US$60 per share in cash and US$10 per share of its own stock. Raising the offer by adding more of its shares would avoid Broadcom having to raise more debt and further pressure its credit rating, the sources said.
Qualcomm’s shareholders have indicated to Broadcom they expect at least US$80 per share in order for Qualcomm to be sold, the sources said. Broadcom’s board has not yet decided on the level of any new offer, the sources added.
Broadcom has made several requests for a meeting with Qualcomm since it unveiled its offer on Nov. 6, the sources said. However, Qualcomm has so far rejected these meeting requests, the sources added. Broadcom had not approached Qualcomm in the weeks prior to announcing its offer, according to the sources.
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