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Broadcom Could Kill Qualcomm In $103 Billion Hostile Takeover, Strangling Innovation

Broadcom Chip.Windell Oskay/Flickr

Despite its recent battle with Apple, Qualcomm is one of the most innovative processing chip companies in the world, constantly driving advancements and taking risks. Now, it’s in danger of getting strangled by Broadcom Ltd., which recently bid $103 billion in a sign of a hostile takeover. This could turn Qualcomm into a by-the-numbers zombie firm that exists only to make Broadcom money.

Broadcom made its move on Monday with its unsolicited bid, Reuters reports. This effectively meant that the company was willing to go the hostile route if Qualcomm rejected the offer. According to sources within the giant chipmaker, this is likely going to be the case since the offer is too low and could come with huge regulation issues.

If this ends up being the case, Broadcom Chief Executive Hock Tan told the publication that a proxy fight is going to be one of his options. This would involve talking shareholders into replacing the current members of the board with people who might be more amenable to the offer.

“We are well advised and know what our options are, and we have not eliminated any of those options,” Tan said. “We have a very strong desire to work with Qualcomm to reach a mutually beneficial deal.”

Tan is a well-known negotiator, managing to close several such deals in his road to turn a small chip making company into an international giant. This particular deal would turn Broadcom into the single largest supplier of mobile processing chips, which is currently serving the 1.5 billion mobile units for this year’s market.

In an opinion piece at PC Mag, this could also result in disaster for innovation in the mobile market. Qualcomm is well-known for its Snapdragon processors, but it made several big bets that failed along the way. This is what innovators do. They take risks.

On the other hand, Broadcom likes to play it safe and put money above all else. This has resulted in many companies being acquired and dismantled, with parts sold off to serve its bottom-line. Tan himself is often considered a financial genius but hardly anyone calls him a tech innovator.

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2017-11-23 16:31:32
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