Qualcomm Again Rejects Broadcom's $150 Bn Acquisition Offer

Ann Santiago
February 10, 2018

Qualcomm's Board Chairman Paul Jacobs told Broadcom in a letter: "Your proposal is inferior relative to our prospects as an independent company and is significantly below both trading and transaction multiples in our sector".

Though Qualcomm has rejected the fresh offer there are chances the acquisition talk would still go on as the company has offered to meet Broadcom members to discuss on the same.

With Qualcomm's crucial shareholder's meeting less than a month away, Broadcom is waging a proxy battle for control of the company.

Additional details regarding the terms of the improved offer were included in a letter delivered by Broadcom to the Qualcomm board of directors.

In a letter to Broadcom's CEO, Qualcomm outlined a number of questions it wants answered in talks with Broadcom, including whether this is really the company's "final" price, or could it pay more than Dollars 82 per Qualcomm share.

However, for the deal to happen, just a nod from Qualcomm is not enough.

NXP shareholders, led by activist hedge fund Elliott Management Corp, are resisting the deal, pushing for Qualcomm to raise its offer.

Qualcomm shareholders are scheduled to vote on these nominations at a March 6 meeting. It's not that shareholders don't like the deal - most do, and they think their company can do a much better job running Qualcomm. It first made an unsolicited, $103 billion offer for Qualcomm on November 6. Specifically, Broadcom says it's offer of $120 billion for Qualcomm "is premised on either Qualcomm acquiring NXP Semiconductors...on the now disclosed terms of $110 per NXP share or the transaction being terminated..."

"It is indisputable that there are significant regulatory hurdles in your proposed transaction". Qualcomm, on the other hand, despite being a leading tech company, has been going through license issues being tangled with Apple for some time now.

Qualcomm, which has locked horns with Apple over patent licensing practices, sells both chips and charge a patent royalty for nearly all smartphones sold globally.

Broadcom's takeover attempt is complicated further by Qualcomm's pending acquisition of NXP Semiconductors NV, meant to give Qualcomm broader access to new markets.

One of those businesses might be Qualcomm's licensing segment, which could fetch about $38 billion including the associated intellectual property, estimates Srinivasan.

Qualcomm has released a letter it penned to Broadcom in reply to the latest bid, but it left the door open for a further bid by directly asking for its rival's potential highest bid. "Your current proposal is inadequate as it materially undervalues Qualcomm".

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