(Bloomberg) -- Silver Lake is set to plow as much as $2.5 billion -- its biggest equity check yet -- to back Broadcom Ltd.’s proposed takeover of Qualcomm Inc., according to people with knowledge of the matter.
The check would be part of $5 billion in convertible debt financing that the private equity firm has pledged to arrange for the giant chipmaker deal, which is valued at $130 billion including net debt. The $5 billion package would be Silver Lake’s largest-ever commitment to a transaction, the people said, asking not to be identified because the details are private.
A representative for Menlo Park, California-based Silver Lake declined to comment.
Qualcomm is assessing Broadcom’s cash-and-stock proposal, but it’s preparing to fend off the unsolicited approach, arguing it undervalues the company, people familiar with the plans have said. Broadcom, seeking to build a powerhouse that leads the market for chips that let electronic devices operate wirelessly, is prepared to launch a proxy battle if Qualcomm spurns the $70-a-share proposal outlined Monday, a separate person with knowledge of the matter said.
The bid will also have to overcome regulatory scrutiny across the globe over the chipmakers’ supply of key components for smartphones.
Silver Lake’s involvement with what’s become Broadcom began in 2005, when it worked with KKR & Co. to buy an Agilent Technologies Inc. unit, which made semiconductors for consumer electronics, for $2.66 billion. The business, renamed Avago Technologies Ltd., was sold back to public-market investors through an initial public offering in 2009, a blockbuster deal that netted Silver Lake five times its investment.
Silver Lake tipped in another $1 billion in convertible debt in 2014, when Avago bought LSI Corp. The firm didn’t inject new funds when Avago bought Broadcom in 2016, electing instead to convert the debt to equity. It owns about $470 million in stock based on Broadcom’s closing price Monday.
The firm provided about $1 billion to Dell Inc.’s $67 billion acquisition of EMC Corp. last year -- then the biggest in the technology industry. It also put in about $1 billion to help Michael Dell take Dell private in a $24.9 billion leveraged buyout in 2013.
With about $39 billion under management, Silver Lake is one of the world’s biggest technology-focused private equity firms. It’s led by managing partners Mike Bingle, Jim Davidson, Egon Durban, Ken Hao and Greg Mondre.
The firm gathered $15 billion in about four months earlier this year for its latest fund, the largest tech-focused pool managed by a private equity firm.
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