Broadcom Ltd. plans Monday to raise its offer for Qualcomm Inc. QCOM -1.09% to around $120 billion, a person familiar with the matter said, a move aimed at increasing pressure on the takeover target in what would be the largest-ever technology deal.
Broadcom is expected to announce a new offer around 7 a.m. ET. It will be “in the ballpark” of $120 billion, though the terms aren’t final yet, the person said.
Based on Qualcomm’s share count in its latest Securities and Exchange Commission filing, the new offer would be in the vicinity of $80 to $82 a share.
Investors and Wall Street analysts have expected Broadcom to submit a higher bid. Qualcomm shares Friday finished New York trading at $66.07, up 5.7% from their close on Nov. 6, when Broadcom made its first offer.
The expected price range of Broadcom’s increased bid is reasonable, said Stacy Rasgon, an analyst with Bernstein Research.
“Even when the deal was first announced, many Broadcom shareholders—and I’d guess a lot of Qualcomm shareholders—had in mind a number with an ‘8’ in front of it,” he said of the per-share bid. Qualcomm didn’t immediately respond to a request for comment.
News of the revised offer was earlier reported by Reuters.
Broadcom launched its bid for the San Diego chip maker in November, offering $105 billion, or $70 a share, in a mix of cash and stock. Combined, they would form the No. 3 chip maker by revenue behind Intel Corp. and Samsung Electronics Co.
Qualcomm’s directors promptly rejected the bid.
The new bid ratchets up the stakes in a hostile standoff that could affect wide swaths of the markets for chips used in data centers and smartphones. Broadcom is a market leader in a variety of chips for wired and wireless devices, including Wi-Fi and Bluetooth chips for smartphones. Qualcomm is a leader in chips that manage cellular communications in smartphones.
Qualcomm, in an effort to persuade shareholders to resist Broadcom’s initial bid, released a presentation mid-January outlining a path to grow adjusted per-share earnings from $4.28 in fiscal 2017 to between $6.75 and $7.50 in fiscal 2019.
It promised that in the event it doesn’t complete its proposed acquisition of NXP Semiconductors NV, which has been held up in regulatory reviews, it would create an equivalent boost to earnings by buying back shares. Qualcomm also promised to shed $1 billion in costs.
Qualcomm in a later letter to shareholders emphasized the difficulty of getting the proposed merger past international regulators regardless of Broadcom’s ultimate offer, saying it was “highly doubtful” the transaction would be approved.
Broadcom and Qualcomm discussed a potential deal as early as 2016, according to regulatory filings. Since launching its offer, Broadcom management has said Qualcomm’s directors refuse to engage. Broadcom responded by nominating its own slate of directors for Qualcomm shareholders to vote on at the company’s annual shareholder meeting, which is slated for early March.
Qualcomm in recent years has been under attack from customers and antitrust regulators who allege the company’s business practices aren’t fair. Apple Inc. is suing the chip maker in multiple countries, and Qualcomm has faced regulatory fines in China, South Korea, Taiwan and the European Union. Qualcomm is appealing some regulatory decisions and fighting Apple in court.
Write to Ted Greenwald at Ted.Greenwald@wsj.com
Appeared in the February 5, 2018, print edition as ‘Broadcom To Raise Offer for Qualcomm.’