Hock Tan is a deal maker. Over the past decade, the Broadcom Ltd. chief executive has hung enough trophy acquisitions on the wall that his company is now large enough to hunt really big game.
His latest target is Qualcomm. On Monday, Broadcom made a bold offer to acquire the San Diego cellular giant for $103 billion in stock and cash. If completed, the deal would be the largest tech takeover ever.
For Tan [pictured], bagging Qualcomm is far from certain. Broadcom offered $70 a share, a 28 percent premium to Qualcomm's pre-offer trading price. Analysts believe Qualcomm's board of directors will reject Broadcom's bid as too low, possibly sparking a proxy fight for board seats this spring.
The deal also will likely face tough regulatory scrutiny, particularly in Europe and China.
The chief executive of Avago Technologies since 2006, Tan made his biggest deal to date last year, buying Irvine-based Broadcom for $37 billion.
The combined company took Broadcom's name. A Malaysian-American, Tan holds an MBA from Harvard Business School and mechanical engineering degrees from Massachusetts Institute of Technology.
The San Diego Union-Tribune spoke with Tan on Tuesday. Friendly and at ease, he answered questions about the Qualcomm offer, patent licensing disputes, his acquisition history and what the deal might mean in San Diego. Here are some excerpts.
Q: Broadcom offered $70 a share for Qualcomm. Given that Qualcomm was trading at $80 a share a couple of years ago, and the troubles with its licensing business will be resolved eventually, it begs the question is the offer not recognizing Qualcomm's growth potential from 5G and cellular expanding into new industries?
A: You have to look at what Qualcomm is now, and in this industry, which changes very dramatically and fast as we all know, what happened two years ago doesn't necessarily reflect what is happening now.
But I want to say we made a very compelling offer to shareholders, and we believe it is a very fair and attractive proposal.
Q: How do you view Qualcomm's patent licensing business? Is it core to the company? How fast can disputes be resolved?
A: This is early stage to dig deep into it. I am sure there are various ways. The main thing we believe is we can approach this very constructively to resolve all these issues with both their customers -- which will also be common customers of ours -- as well as regulators.
We believe we can work with Qualcomm management to deal with this. What we are asking by presenting this compelling offer is to engage. We really would like to be able to engage with the company and work through these things together. We think we can do it very well -- two minds working constructively together.
We obviously have the highest respect for this company and the intellectual property they have developed over the years.
Q: Qualcomm spends a lot on research and development. It is kind of an R&D shop in cellular. With 5G coming, do you think you would continue that research engine, or is it something that can be done more efficiently?
A: Broadcom is an engineering shop, too. We don't do cellular baseband but we do a lot of stuff. We do switching, routing. We do video delivery. We do Wi-Fi and a lot of product lines. We view ourselves as a technology company, which means engineering is all important. So we invest a lot in research and development.
I have the upmost respect for Qualcomm engineering and technology. We are going to continue to invest in the cellular wireless connectivity solutions that they have done and keep progressing into 5G. They have a lead, I believe, a strong lead over anybody else. And it is great for them to keep perpetuating this lead.
Q: You have been good at acquisitions. That said, this is a bigger company, and there's NXP. There's Brocade. There is a lot going on. Can you talk about how you make that work?
A: We have done a lot of it over the last five or six years. I give a lot of focus and time to integration, which is super important, especially for employees, engineers. I am very sensitive to that.
At the same time, we have a very good track record and a very good playbook on how we do it properly. The key word is sustainability. It is not good to do it for one year or two years and then collapse. For all our people in Broadcom, it is all about sustainability. And we bring in the people who are running the businesses we acquired and motivate them, incentivize them, to do an even better job.
Q: Qualcomm has roughly 13,000 people here in San Diego. How do you view San Diego? What might happen in the future to these people?
A: We value talent wherever we find it. This business grew up out of San Diego. The 13,000 employees I am aware reside in San Diego, I believe, are the core to this company. So the direct answer, point blank, is we are very committed to San Diego. We are very committed to the cellular wireless business. And we have a history of bringing on all this talent under the Broadcom umbrella. It's not an issue. We are very committed to San Diego.