Qualcomm rejects Broadcom's second offer to buy the company

Yolanda Curtis
February 9, 2018

Under the terms of the deal, Broadcom would acquire all outstanding shares of Qualcomm for $60.00 in cash and $22 in Broadcom stock per share, as well as assume the company's debt.

Specifically, Qualcomm wants to know if the latest bid submitted February 5 is the highest price Broadcom will offer and if the rival chipmaker will take whatever actions necessary to ensure the transaction closes.

Qualcomm's board of directors unanimously rejected Broadcom's sweetened purchase offer on Thursday, saying it "materially undervalues" the San Diego wireless pioneer.

It also hinges on Qualcomm not delaying or adjourning its annual meeting past March 6, when Qualcomm shareholders will vote on a new slate of directors recommended by Broadcom and private-equity firm Silver Lake Partners or retain the existing directors.


In the letter, Qualcomm board said it is seeking clarity on whether Tan would be willing to up the price.

Broadcom's bid for the larger company is Tan's most audacious move following a string of deals that have already made his company one of the world's largest suppliers of semiconductors.

However, Jacobs did extend an olive branch of sorts, offering to meet with Tan to discuss gaps in value and regulatory hurdles, as well as "significant issues" that remain unaddressed. It's now trading at $62.42. Qualcomm has countered that it expects to win in court over time and overturn some of the more than $4 billion it has been fined.

Qualcomm's contention that the chipmaker's future is brighter as a standalone company has become a tougher sell, given the multiple challenges that have cropped up in the past two years.


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.

Qualcomm added that the regulatory approval process could take longer than 18 months and disrupt Qualcomm during a period of explosive innovation in the industry that includes the development of 5G mobile phones, autonomous driving and the expanding use of computerized gadgets from refrigerators to thermostats.

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

Broadcom pledged to pay a "significant" breakup fee if a deal with Qualcomm is vetoed by regulators.


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