Broadcom Analysts Noted Perks of Moving HQ, Then Got Validation

Photographer: Patrick T. Fallon/Bloomberg

Analysts have spent the last 24 hours speculating that one reason Broadcom is moving its headquarters to the U.S. from Singapore is that it makes U.S. acquisitions easier. Maybe they were right.

Just a day after the chipmaker disclosed the relocation plan, people familiar with the situation told Bloomberg News that Broadcom is considering a bid of more than $100 billion for Qualcomm.

Cowen’s Karl Ackerman opined in a note on Thursday that moving to the States dovetailed with the chipmaker’s acquisitive ambitions. “The real story to be told is that these actions promote the longevity of AVGO’s modus operandi of acquiring, growing and extracting value,” he wrote. 

Similarly, Bank of America Merrill Lynch analyst Vivek Arya wrote Thursday that, “M&A has been a critical part of AVGO’s strategy and it has consistently proven its ability to create highly accretive transactions.”

And RBC analyst Amit Daryanani and B. Riley FBR’s Craig Ellis pointed out on Thursday that a U.S. domicile would increase chances of completing the $5.9 billion takeover of Brocade that has been in the works since last year.

Broadcom shares rose 5.5% on Friday to close at a record.

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