- Broadcom is attempting a hostile takeover of Qualcomm for $103 billion, which would make it the biggest tech deal ever.
- Qualcomm hasn’t been receptive to the proposition and plans to fight it, while Broadcom looks ready for a proxy fight.
- Investors are positioning for further share gains for Qualcomm, which can be interpreted as confidence in a deal eventually getting done.
Despite a 16% spike in Qualcomm shares since initial reports of the proposed deal, traders are still paying the highest premium in more than two years to bet on a further increase, relative hedges against stock losses.
And while the company’s stock still sits roughly 10% below the $70 per share offered by Broadcom, that’s to be expected at this point. Even though acquisition targets generally spike on the initial news, they tend to trade at a discount to the offer price until a deal is set in stone on both sides and proper regulatory approval is received.
With that in mind, investor positioning can be a valuable indicator when handicapping the likelihood a deal gets completed. While Qualcomm is very much trading in this middle ground now, the unabashed bullishness being signaled by the options market suggests that they’re confident in further share gains that would likely accompany a done deal.
It’s possible that traders are being encouraged by Broadcom’s aggressive approach to the takeover. According to a <a target="_blank" rel="nofollow" href="https://www.bloomberg.com/news/articles/2017-11-06/broadcom-willing-to-go-hostile-to-win-105-billion-qualcomm-deal" target="_blank" Read More Here