One of Broadcom’s most visible products is the bluetooth wifi combo chips it sells Apple for it’s Iphones, iPads, and Watch. But what if sometime in the future Apple tells you that it will be integrating your product in it’s own baseband chip and won’t be needing your services.
This is speculation of course but this article pretty much gives clues that Apple is planning to do more stuff in house and explains to me why they put themselves up for sale.
As a rule of thumb you can say the seller knows more than the buyer about the company or product in question. True in used cars , true in buyouts.
Small tech companies may be an exception.Usually these are closely held and have a very narrow product range. The big stockholders, usually company founders, are locked in. Rich on paper but no cash flow. So they are willing to sell out, get stock or cash , and then can diversify themselves. Being part of the bigger company means capital is a lot easier to get.
Big mergers are far more likely to fail than to succeed
Some of these were real whoppers. Daimler Benz paid $36 billion for Chrysler sold it for $650 million.
So why do companies do them? I suspect in part it is a "mine is bigger than yours " thing with CEO. A larger company gives them more status at the country club. And can justify a larger salary.
Apple has the cash flow to do more vertical integration, And Broadcom products look like a good place to start.