Broadcom Ltd. (Nasdaq: AVGO) has raised its buyout offer for Qualcomm, Inc. (QCOM) from $70 per share to $82 per share, but the market’s muted reaction on Monday suggests there is still plenty of investor skepticism that a merger will be completed.
In a statement, Broadcom called the new bid its “best and final offer” for Qualcomm. Broadcom’s previous bid came in November. Qualcomm management originally urged shareholders to reject the hostile takeover, saying the offer price didn’t reflect the full value of the company.
The new $82 offer price is contingent on Qualcomm completing its buyout of NXP Semiconductors N.V. (NXP) at its current offer price of $110 per share. Qualcomm is still waiting on regulators in China to approve its NXP buyout, but European regulators gave the deal the green light last month.
There are certainly a lot of moving parts in the proposed merger between Broadcom and Qualcomm. Apple (AAPL) is one of Qualcomm and Broadcom’s largest customers. But while Apple and Broadcom are on relatively good terms, Apple and Qualcomm are currently pursuing several lawsuits against one another related to patent disputes and royalties.
Following the initial buyout bid in November, KeyBanc analyst John Vinh said Broadcom would likely do whatever it takes to settle the bad blood between Qualcomm and Apple, even if it means selling off Qualcomm’s licensing division.
Surprisingly, Qualcomm stock opened down more than 2.4 percent to below $65 per share on Monday, suggesting investors are skeptical that the $82 buyout bid will be accepted by shareholders and/or approved by global regulators.
CFRA analyst Angelo Zino says investors are right to question the deal. “We see a low probability of QCOM being acquired by Broadcom, primarily given regulatory concerns,” Zino says.
However, even if the Broadcom deal falls through, Zino says Qualcom still has a solid outlook given its presence in the China market. “We continue…
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