Qualcomm smacks down Broadcom takeover bid

Reuters

$130 billion is a massive number, but if Broadcom sees hope in the future where it brings Qualcomm under its wing, it could very well come back at a later date with an even higher number. Qualcomm's board believes that Broadcom's proposal significantly undervalues Qualcomm given its leadership position in mobile technology and their future growth opportunity. Broadcom has shown its willingness to buy Qualcomm regardless of whether it closes the NXP deal.

Shares of Qualcomm were up 1.8 per cent at US$65.74 in early afternoon trading, while those of Broadcom were down 0.4 per cent at US$263.95.

Just over a week ago, we first brought you news that Broadcom was preparing an unsolicited offer to purchase Qualcomm.

Paul Jacobs, Executive Chairman and Chairman of the Board of Qualcomm Inc. said this about the potential acquisition.

Qualcomm rejected an unsolicited US$103 billion offer from Broadcom, saying that the proposal is significantly undervalued and that a tie-up between the massive chip makers would face substantial regulatory resistance. "We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders and we are encouraged by their reaction".

"We are highly confident that the strategy (CEO Steve Mollenkopf) and his team are executing on provides far superior value to Qualcomm shareholders than the proposed offer", said Tom Horton, Qualcomm director.

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. Qualcomm announced today it has rejected Broadcom's takeover bid, and for now, it will remain subsidiary to no one. Qualcomm is already at the front of the pack when it comes to mobile chipmaking, and it stands to make a lot of money from that position as carriers begin to roll out 5G networks.

If Broadcom makes a hostile bid, Qualcomm's governance rules would allow the rival to submit its own slate for the entire 11-member board by the 8 December nomination deadline.

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