Qualcomm is preparing to reject a US$130 billion ($187.7b) takeover offer from US microchip rival Broadcom that, if agreed, would be the biggest technology deal of all time.
Broadcom confirmed the mammoth cash, shares and debt offer today, a proposal that would make it the dominant player in the booming market for mobile semiconductors.
If accepted it would be one of the biggest deals of all time, and double the size of the biggest tech sector deal to date, last year's US$65b sale of EMC to Dell.
However, Qualcomm appears set to reject the offer, with sources blasting it as an opportunistic bid that severely undervalues the company.
Qualcomm is a 32-year-old San Diego company that has been central to the rise of mobile networks, making the modem and computer processors that appear in billions of smartphones.
However, recent months have seen it mired in a dispute with Apple over royalty payments from the iPhone giant, which has seen its shares drop by 20 per cent before Broadcom's interest was first revealed last week.
Broadcom chief executive Hock Tan, a prolific dealmaker who has built his company from an unwanted Hewlett Packard division into one of the world's leading chip companies, laid out his offer in a letter to Qualcomm's board.
The US$70 a share offer, made up of US$60 in cash and US$10 in Broadcom shares and which includes taking on US$25b in Qualcomm debt, is a 28 per cent premium to Qualcomm's shares before the offer was revealed last week. But it is only barely above the company's share price a year ago.
Qualcomm, which rose 12.7 per cent on Friday in the US, traded roughly flat today at about US$62 a share, well below the offer price, suggesting investors are not confident of a deal.
Broadcom said any regulatory issues "will be met in a timely manner", but Qualcomm's bosses are believed to be wary of a lengthy competition probe in a market that has been consolidating for years.
Broadcom, which is split between the US and Singapore, recently said it would move its domicile permanently to the US in an announcement made at the White House that some saw as an attempt to win political approval for deals.
In contrast to Qualcomm, which has warned that its dispute with Apple could cost it billions, Broadcom is seen as having a much better relationship with the iPhone giant.
Qualcomm said it would review the offer.