Broadcom Ltd. (AVGO) - Get Report is said to be exploring a deal to acquire Qualcomm Inc. (QCOM) - Get Report for more than $100 billion, according to a report from Bloomberg, citing people familiar with the matter.
A takeover could be the biggest acquisition of a chipmaker ever. Broadcom is reportedly speaking to advisers about the potential deal, which would offer Qualcomm about $70 per share in cash and stock.
That valuation is "quite reasonable," Advisors Capital Management portfolio manager Joanne Feeney told TheStreet. That's because Qualcomm has been traded down over its royalties dispute with Apple Inc. (AAPL) - Get Report .
Feeney said Qualcomm is the type of acquisition Broadcom CEO Hock Tan has targeted since his Avago bought the company in 2015. "Qualcomm fits the description," as it has its own strong proprietary lineup with intellectual property rights, or "deep moats," Feeney said.
A possible deal would be groundbreaking in the chipmaker industry, but isn't likely to stir antitrust concerns from regulators, Feeney said, as Broadcom and Qualcomm have "complementary products." Each produces different parts for phones including the Apple iPhone.
"They will end up having a higher dollar content in every phone," Feeney said. That could ruffles feathers at Apple, which would be more beholden than it typically is to one single supplier should a deal happen.
"They are now relying much more on a single company," Feeney said, hypothesizing the outcome should a takeover come to fruition.
Qualcomm didn't immediately return TheStreet's request for a comment.
Qualcomm stock jumped 12.71% to $61.81 on heavy trading volume by the market close Friday, after scoring its biggest intraday move since October 2008.
Broadcom stock gained 5.45% to $273.63 at the close.
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