Qualcomm rejects Broadcom's record-breaking $105 billion takeover attempt (AVGO, QCOM)

FSMNews

After a comprehensive review, conducted in consultation with our financial and legal advisors, the Board has concluded that Broadcom's proposal dramatically undervalues Qualcomm and comes with significant regulatory uncertainty. Broadcom on November 6, 2017 made an unsolicited $103 billion bid for the company.

The company's decision to decline what would be the biggest-ever tech deal simply opens the door for the inevitable proxy battle that will ultimately decide the fate of the chipmaker.

United States semiconductor and telecommunications firm Qualcomm rejected a $103bn takeover bid from competitor Broadcom on Monday, saying the offer "dramatically" underestimated the value of the company. The preparations for the board meeting indicate that Qualcomm is poised to rebuff the bid as insufficient as early as Monday, although it may decide to spend a few more days this week to prepare its full response to Broadcom, the sources added. Broadcom bid $5.5 billion a year ago for data center-connectivity company Brocade. Qualcomm's profit in the fiscal year ended September 24 plummeted 57%, and its share price sank about 18% in the 12 months leading up to the bid. A combination with Broadcom would not have propelled it past industry leaders Intel and Samsung. That would permit Qualcomm shareholders to vote to change the company's board and force it to engage with Broadcom.

Qualcomm could further strengthen its position by closing its proposed $39 billion acquisition of automotive chip leader NXP Semiconductors NV.

In making its offer for Qualcomm, Broadcom CEO Hock Tan said the transaction "will position the combined company as a global communications leader with an impressive portfolio of technologies and products". Monday's back and forth signaled to Walkley that "Qualcomm's licensing business remains undervalued and both companies believe Qualcomm can resolve its licensing issues with Apple and another leading OEM". They have forced Qualcomm to offer concessions, and may demand more.

Shares of Qualcomm rose as much as 2.5 percent to $66.17, while those of Broadcom fell as much as 1.3 percent to $261.55.

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