The director’s board of Qualcomm ‘unanimously’ rejected the acquisition offer from Broadcom that totaled $121 billion. It is the largest acquisition bid in the technology industry, and a further decision on the proposal is likely in the hands of the shareholders by March.
Yesterday, February 8, Qualcomm said that this offer indicates ‘materially’ undervaluing them, and it “falls well short of the firm regulatory commitment” required for approval of the transaction. Today, Broadcom said that the offer includes $82 per share and it is their ‘best and final.’
Broadcom targeted this weekend to finish the transaction. The deal would have $60 in cash and remainder of its shares. This was also a 17% rise over its previous offer in November that entailed $70 per share and was similarly rejected by Qualcomm.
Qualcomm expressed its intention to sit and discuss with Broadcom to further conversations. But the second dismissal leaves the shareholders to be decisive. They are to vote on March 6 regarding replacement of Qualcomm’s board with Broadcom’s nominees.
This vote will ‘represent a choice’ of the shareholders: either Broadcom’s strategy of buying companies and implementing on profit expansion or Qualcomm’s promise of future growth via investments in new products and technology.
Qualcomm’s Executive Chairman Paul Jacobs gave an open letter to Broadcom’s CEO Hock Tan, writing: “Your proposal is inferior relative to our prospects as an independent company and is significantly below both trading and transaction multiples in our sector.”
Tan expressed astonishment at his company regarding Qualcomm not willing to meet until Tuesday. He as well added that the bid further includes a regulatory reverse termination fee of $8 billion.
Broadcom’s series of acquisition bids already made them a leading supplier of semiconductors, and Qualcomm’s leading modem-chip division for smartphones would be a suitable addition to Broadcom’s expansion. According to Tan, the acquisition would bring them the chance to dominate in the market.
As for the market experts, Tan’s accomplishments this far are likable. 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.
Furthermore, Qualcomm’s acquisition of NXP that would give the former an opening to other markets, is still in process. The $47 billion deal awaits final regulatory approval. This is a pinprick considering Broadcom’s ‘takeover attempt,’ leading to further complicacies.
Broadcom said that its second offer is contingent on the final decision regarding NXP acquisition.
Your proposal ascribes no value to our accretive NXP acquisition, no value for the expected resolution of our current licensing disputes and no value for the significant opportunity in 5G. – Jacobs, Qualcomm’s Executive Chairman
We do hope that things soon get settled regarding the Qualcomm Broadcom acquisition issues between the companies so that focus gets resumed over technology innovations. Stay tuned with us to know more about the next development of Qualcomm-Broadcom brawl as it happens.