Chipmaker Qualcomm spurns $130 billion Broadcom merger bid

The news agency's sources also suggested Broadcom could seek to pursue a hostile takeover by submitting directors for election to Qualcomm's board to force it to engage, should the latter's shareholders back its director candidates.

Qualcomm's board believes that Broadcom's proposal not only undervalues the company but also "comes with significant regulatory uncertainty". The company hopes the change will make it easier to get deals done and more specifically, help it avoid a cumbersome federal review process for a $5.5 billion deal for United States network provider Brocade Communications Systems.

The US microchip giant Qualcomm has rejected a $130bn (£99bn) takeover offer from Broadcom, setting the stage for its industry rival to return with an even bigger offer.

Last week, Broadcom offered to acquire Qualcomm in a deal worth $130 billion, including debt, which would equate to $70 per share in cash and Broadcom stock for shareholders.

Shares of Qualcomm have been declining in value in the recent quarters, which is why Broadcom made its proposal.

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

"No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry", CEO Steve Mollenkopf said in a press release.

Qualcomm CEO Steve Mollenkopf added that the USA chip maker has a future in mobile, the Internet of Things (IoT), edge computing and networking within the semiconductor industry, and the firm has no doubt of future growth in these areas.

Tom Horton, Qualcomm director, said that the company and its board are focused on driving value for their shareholders. We are not sure whether Broadcom can initiate a proxy fight to get the deal approval from Qualcomm's board. Looking at the note that says "dramatically undervaluing" Qualcomm, this opens the door for a higher offer that Broadcom could potentially make and Qualcomm then accepting, should any higher offer come.

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