If everything goes according to the Broadcom, then, this will be the 3rd biggest semiconductor manufacturer in the world, after Intel and Samsung. According to the recent information, the company is planning a merger between the two mobile processor brands (Qualcomm and Broadcom) for a whopping $130 take out in terms of shares.
Until today, the highest share rate that has been recorded for the Qualcomm is $54.84 per share (until November 2nd) and now Broadcom is offering an irresistible $70 per share. If this deal happens, then this will be the biggest buyout for any company in the tech portfolio. Which is almost double that of the EMC’s Dell acquisition for $67 billion.
However, according to financial Times, Qualcomm has rejected the offer and here is why this is the best for the company as well as the consumers.
Brand value: When people think for the premium smartphone chipset maker, the first name that comes to their mind is Qualcomm. Though the company has a lot of dispute with the Apple, it still leads the smartphone market. In fact, most of the flagship Android smartphones were based on Qualcomm Snapdragon 835 Mobile Solution and not to forget their foray into the 5G mobile modem X50, which was unveiled a few weeks before.
According to Anshel Sag, an associate analyst at Moor Insights and Strategy: “Qualcomm combined with NXP would be a vastly larger company by revenue than Broadcom and the current Qualcomm is already quite a bit larger than Broadcom today (after Avago bought Broadcom),”
Bad timing for the bidding: According to the analysts, the timing is not alright for the deal to happen. No, we are not talking about the subh shakun or apashakun, but considering all the dispute that Qualcomm has with Apple is not a good time to give proper value for the Qualcomm’s potential.
According to Blader, “[Broadcom’s proposal] is an unwelcome distraction for Qualcomm as it seeks to close the NXP acquisition, negotiate with regulators and work through the ongoing dispute with Apple,” “regulatory scrutiny is likely to be substantial and would add up to make this a highly risky transaction.”
Innovation: If these firms come together, then, there will be less innovation due to almost no competition which might hugely withhold the real-life innovations from both the brands.
According to Anshel Sag, “There are a lot of businesses that both companies have that are in competition with one another which means lots of cutting. Avago/Broadcom’s MO is to buy, chop, sell off and raise prices. They do it again and again. I don’t see how someone like Apple would want this deal to go through. If you combined Qualcomm, NXP and Broadcom you’ve got most of the chips in the iPhone and that hurts Apple’s ability to negotiate.”
So, what do you think about these mergers? Do these companies should work as one entity or they should work individually? Share your views in the comment box.