Broadcom offers second biggest break-fee in history

Singapore-based Broadcom has offered to pay US chipmaker Qualcomm £5.76bn ($8bn) if regulators block its £105bn ($146bn) takeover bid for the company, which could be the second biggest break fee in history. The $8bn fee represents about 6.6 per cent of the deal’s $121bn equity value. Qualcomm’s decision to give Hock Tan, the acquisitive chief executive of Broadcom, a chance to make the case for a combination is a definitive sign that the San Diego-based company could be open to a deal.

Paul Jacobs, chairman of Qualcomm’s board said: “If Qualcomm entered into a merger agreement and, after an extended regulatory review period, the transaction did not close, Qualcomm would be enormously and irreparably damaged.”

Broadcom’s bid represents a 54 per cent premium to Qualcomm’s average stock price in the 30 days before the bid. Qualcomm’s shareholders will meet on March 6 to vote on a Broadcom-backed proposal to unseat and replace the entire board of the US chipmaker, which would pave the way to a deal if the proposal was successful.