On Nov. 6, Broadcom announced an unsolicited bid to acquire Qualcomm for $70 per share ($60 in cash and $10 in stock) in a deal valued at $130 billion, assuming that Qualcomm's ongoing bid to acquire NXP Semiconductors for $38 billion goes through.
It's not a done deal, however.
It is likely that Qualcomm will reject the bid, as it believes that its value is far below what the company is worth.
The deal stands regardless of the results of Qualcomm's $110 per share bid for NXP Semiconductors, Broadcom said in a news release.
Broadcom's Wi-Fi chips are essentially a commodity and priced much lower than the modem chips.
Qualcomm's share price closed at $61.81 on Friday.
Intel shares fell 1.6 percent to $46.34. Shares of NXP fell 2 percent and Brocade slipped 2.6 percent.
According to sources Qualcomm is not aware of the details of Broadcom's bid and the company has yet to make any comment.
Qualcomm shares rose up by 3.6 percent in premarket trading this Monday in NY.
The proposed deal comes at a time when there has been significant consolidation within the chipset market, driven by greater demand for smartphones and connected devices. A combination with Broadcom would not change that. While it did not specify particular companies, Qualcomm and Apple have been in a long-running legal battle over licensing fees owed to Qualcomm.
Broadcom said if the deal is approved, it expected a combined company to have revenues of about $51 billion.
"These companies are leaders in those areas but there are other companies supplying them", said Lineback, who added that asset sales in those areas, if needed to address antitrust concerns, would not affect the value of the deal.
Broadcom may be able to skip review by regulators concerned about foreign ownership of US assets, since it is moving its headquarters to California.