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Big tech tieup: Broadcom bids $130 bn

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This file photo shows a sign at a Qualcomm office on in San Jose, California. AFP

WASHINGTION (AFP) -In what could be the biggest deal ever in the tech sector, Broadcom on Monday bid $130 billion for rival chip maker Qualcomm to gain position in the booming sector fueled by growth in smartphones and an array of connected devices from cars to wearables.

The proposal by Singapore-based Broadcom, which has announced plans to return its domicile to the US, would consolidate two major players in the semiconductor sector.

Broadcom’s unsolicited offer amounts to $70 per share, including $60 in cash and $10 in Broadcom stock, or 28 percent above the closing price of Qualcomm on Thursday, before reports of the deal surfaced.

“This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products,” Broadcom chief executive Hock Tan said in a statement.

“With greater scale and broader product diversification, the combined company will be positioned to deliver more advanced semiconductor solutions for our global customers and drive enhanced stockholder value.”

Qualcomm, based in San Diego, California, said it would “assess the proposal in order to pursue the course of action that is in the best interests of Qualcomm shareholders.”

News of the deal came days after Tan appeared at the White House with President Donald Trump to announce plans to move the tech company back to the US from Singapore.

It comes as Qualcomm seeks a $47 billion acquisition of Dutch rival NXP, a deal that is the subject of an European Union anti-trust probe.

Broadcom, meanwhile, is seeking to buy US rival Brocade Communications in a deal being reviewed by Washington.

Broadcom and Qualcomm are both major makers of semiconductors used in the latest tech gadgetry.

The US firm is the leader in processors for smartphones and is expanding into new sectors, while Broadcom makes an array of chips for wireless communications, set-top boxes and electronic displays.

On Wall Street, Broadcom shares rose 1.4 percent and Qualcomm added 1.1 percent.

RBC Capital Markets analyst Amit Daryanan said in a research note that the deal “makes both financial and strategic sense” for Broadcom.

Combining the firms would create a behemoth with some $51 billion in revenues, including those from NXP.

But any deal would need to pass muster with Qualcomm shareholders and could face regulatory scrutiny in the United States and other markets.

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