What a crazy turn of events. After all this M&A activity, Avago, a virtually unknown company, might end up owning Broadcom, Qualcomm, NXP and Freescale.
How is this even possible? Who is financing these guys?
How is this even possible? Who is financing these guys?
LBO is a good example. Small company A can acquire a much bigger company B by pledging assets of B to take a loan to acquire B. This has been used to take a lot of companies private like Dell and even Avago before they were re-listed.
The other example is cash and share. Small Company A can offer to acquire bigger company B by offer x amount in cash along with y amount of stocks in the joint company. In this case, company A needs to only serve up x amount of cash. This was the case when Avago acquired Broadcom - $17 billion cash and $20 billion in shares for total of $37 billion. Avago needed to pony up only $17 billion in cash, rest was taken care by conversion ratios:
https://finance.yahoo.com/news/basics-may-broadcom-avago-mer...
The details of this offer are still not clear. Currently it is only an offer of cash and stock at $70 per share for Qualcomm. Currently, Broadcom has ~5 billion in cash and a huge amount of debt. There has been a lot of interest in the company's debt:
http://marketrealist.com/2017/02/how-much-broadcoms-debt-bur...
As the article says:
> The combined business would instantly become the default provider of a set of components needed to build each of the more than a billion smartphones sold every year.
This could give them monopoly on some of the transactions which they maybe aiming for. It remains to be seen if they will succeed.
They derive from HP and Agilent Technologies, along with LSI. Pieced together originally by KKR & Silver Lake. Realistically it's a half century old entity. They then moved the corporation official seat to Singapore for various strategic reasons.
But lets consider 2013. Avago had a revenue of $2.5bn, respectable, but that's not much when compared with Qualcomm's $24.9bn, less than Broadcom's $8.3bn, NXP's $4.8bn, and Freescale's $4.1bn.
In fact it seems that at least when it came to revenues, Avago was the smallest company on that list.
Unsure who you think should or would know Avago, but I am fairly certain they are far from a household name like HP is.
People don't usually research who makes the chips in their doohickeys and gizmos.
Not really a retort. Just Qualcomm is at least known perhaps more than all the other companies combined. As little as that's worth.
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