Qualcomm shuns Broadcom bid

Marco Green
November 14, 2017

Qualcomm also warned that such a merger would face significant regulatory hurdles.

Broadcom can now raise its bid or launch a hostile takeover by enlisting shareholders to its cause.

"It is the Board's unanimous belief that Broadcom's proposal significantly undervalues Qualcomm relative to the company's leadership position in mobile technology and our future growth prospects", said Paul Jacobs, executive chairman of Qualcomm. But whether Broadcom is willing to make an offer Qualcomm can't refuse still isn't clear.

"No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry", said Steve Mollenkopf, CEO of Qualcomm. Broadcom responded "it remains fully committed to pursuing its acquisition of Qualcomm Incorporated". "We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders".

Qualcomm Chief Executive Steven Mollenkopf has spent the past few days soliciting feedback from Qualcomm shareholders, and feels that Broadcom's $70-per-share bid undervalues the company and does not price in the uncertainty associated with getting the deal approved by regulators, according to the sources.

The deal would dwarf Dell Inc's US$67 billion acquisition of EMC in 2015 - then the biggest in the technology industry. Today's Broadcom is the product of a $37 billion combination in 2016 between Avago, a Singapore-based company that was once part of a former unit of pioneering PC maker Hewlett-Packard, and Broadcom, another company with origins in Southern California which made chips for tablets, smartphones and other telecom and cable applications. But analysts say Broadcom still has some cards to play: It could simply sweeten its bid, of course, or as Bloomberg pointed out, it could wage a proxy battle by bringing its offer directly to Qualcomm shareholders. "We would not make this offer if we were not confident that our common global customers would embrace the proposed combination".

Acquiring Qualcomm is further complicated by his target's own push to close a more than US$40 billion purchase of NXP Semiconductors NV. A statement release by Qualcomm said that the board had "unanimously rejected the unsolicited proposal announced by Broadcom".

Other reports by Click Lancashire

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